[House Hearing, 119 Congress]
[From the U.S. Government Publishing Office]
PRICED OUT OF THE AMERICAN DREAM:
UNDERSTANDING THE POLICIES BEHIND RISING
COSTS OF HOUSING AND BORROWING
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HEARING
BEFORE THE
COMMITTEE ON FINANCIAL SERVICES
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED NINETEENTH CONGRESS
SECOND SESSION
__________
FEBRUARY 10, 2026
__________
Serial No. 119-56
Printed for the use of the Committee on Financial Services
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
www.govinfo.gov
__________
U.S. GOVERNMENT PUBLISHING OFFICE
63-863 PDF WASHINGTON : 2026
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HOUSE COMMITTEE ON FINANCIAL SERVICES
FRENCH HILL, Arkansas, Chairman
BILL HUIZENGA, Michigan, Vice MAXINE WATERS, California, Ranking
Chairman Member
FRANK D. LUCAS, Oklahoma SYLVIA R. GARCIA, Texas, Vice
PETE SESSIONS, Texas Ranking Member
ANN WAGNER, Missouri NYDIA M. VELAZQUEZ, New York
ANDY BARR, Kentucky BRAD SHERMAN, California
ROGER WILLIAMS, Texas GREGORY W. MEEKS, New York
TOM EMMER, Minnesota DAVID SCOTT, Georgia
BARRY LOUDERMILK, Georgia STEPHEN F. LYNCH, Massachusetts
WARREN DAVIDSON, Ohio AL GREEN, Texas
JOHN W. ROSE, Tennessee EMANUEL CLEAVER, Missouri
BRYAN STEIL, Wisconsin JAMES A. HIMES, Connecticut
WILLIAM R. TIMMONS, IV, South BILL FOSTER, Illinois
Carolina JOYCE BEATTY, Ohio
MARLIN STUTZMAN, Indiana JUAN VARGAS, California
RALPH NORMAN, South Carolina JOSH GOTTHEIMER, New Jersey
DANIEL MEUSER, Pennsylvania VICENTE GONZALEZ, Texas
YOUNG KIM, California SEAN CASTEN, Illinois
BYRON DONALDS, Florida AYANNA PRESSLEY, Massachusetts
ANDREW R. GARBARINO, New York RASHIDA TLAIB, Michigan
SCOTT FITZGERALD, Wisconsin RITCHIE TORRES, New York
MIKE FLOOD, Nebraska NIKEMA WILLIAMS, Georgia
MICHAEL LAWLER, New York BRITTANY PETTERSEN, Colorado
MONICA DE LA CRUZ, Texas CLEO FIELDS, Louisiana
ANDREW OGLES, Tennessee JANELLE BYNUM, Oregon
ZACHARY NUNN, Iowa SAM LICCARDO, California
LISA McCLAIN, Michigan
MARIA SALAZAR, Florida
TROY DOWNING, Montana
MIKE HARIDOPOLOS, Florida
TIM MOORE, North Carolina
Ben Johnson, Staff Director
C O N T E N T S
----------
Tuesday, February 10, 2026
OPENING STATEMENTS
Page
Hon. French Hill, Chairman of the Committee on Financial
Services, a U.S. Representative from Arkansas.................. 1
Hon. Maxine Waters, Ranking Member of the Committee on Financial
Services, a U.S. Representative from California................ 3
WITNESSES
Mr. Brian Brooks, Chairman and CEO, Meridian Capital Group....... 4
Prepared Statement........................................... 7
Mr. Kevin O'Leary, Chairman, O'Leary Ventures.................... 17
Prepared Statement........................................... 19
Mr. Stephen Moore, Co-Founder, Unleash Prosperity................ 23
Prepared Statement........................................... 25
Dr. Darrick Hamilton, University Professor, the New School, and
Chief Economist, AFL-CIO....................................... 33
Prepared Statement........................................... 35
APPENDIX
MATERIALS SUBMITTED FOR THE RECORD
Hon. Brad Sherman:
CFPB union NTEU 335.......................................... 88
Hon. Joyce Beatty:
``Now Is Time to Build on King's Economic Legacy, Hamilton
Says''..................................................... 90
Hon. French Hill:
Jay Parsons: Rental Housing Economist........................ 94
Sean A. Dobson: Chairman, CEO, and CIO, Amherst.............. 97
Hon. Sylvia R. Garcia:
``Construction Workforce Shortages are Leading Cause of
Project Delays As Immigration Enforcement Affects Nearly 1/
3 of Firms''............................................... 106
``Punishing Institutional Real Estate Investors Will Worsen
The Housing Affordability Crisis''......................... 109
``Trump cannot Achieve His Economic Goals Without More
Immigrants''............................................... 114
RESPONSES TO QUESTIONS FOR THE RECORD
Written responses to question for the record from Mr. Kevin
O'Leary
Representative Ann Wagner.................................... 117
Representative Sylvia R. Garcia.............................. 118
LEGISLATION
H.R.----, the Save our Shrimpers Act............................. 120
H.R. 6962, the Families First Housing Act of 2026................ 122
H.R. ----, the UAE Financial Accountability Act of 2026.......... 128
H.R. ----, the Exchange Rate Accountability Act of 2026.......... 130
H.R. ----, the American Family Housing Act....................... 134
H.R. ----, a bill to set restrictions on the sale of single-
family homes by the federal government......................... 137
PRICED OUT OF THE AMERICAN DREAM:
UNDERSTANDING THE POLICIES BEHIND RISING COSTS OF HOUSING AND BORROWING
----------
Tuesday, February 10, 2026
U.S. House of Representatives,
Committee on Financial Services,
Washington, DC.
The committee met, pursuant to notice, at 10:10 a.m., in
room 2128, Rayburn House Office Building, Hon. J. French Hill
[chairman of the committee] presiding.
Present: Representatives Hill, Lucas, Sessions, Huizenga,
Wagner, Barr, Williams of Texas, Loudermilk, Davidson, Rose,
Steil, Meuser, Kim, Donalds, Fitzgerald, Lawler, McClain,
Downing, Haridopolos, Waters, Sherman, Scott, Green, Cleaver,
Himes, Foster, Beatty, Vargas, Gottheimer, Gonzalez, Casten,
Pressley, Tlaib, Torres, Garcia, Fields, Bynum, and Liccardo.
Chairman Hill. The committee on Financial Services will
come to order. Without objection, the chair is authorized to
declare a recess of the committee at any time. Today's hearing
is entitled ``Priced out of the American Dream: Understanding
the Policies Behind Rising Costs of Housing and Borrowing.''
Without objection, all members will have 5 legislative days
within which to submit extraneous materials to the chair for
inclusion in the record.
I recognize myself for 5 minutes for an opening statement.
OPENING STATEMENT OF HON. FRENCH HILL, CHAIRMAN OF THE
COMMITTEE ON FINANCIAL SERVICES, A U.S. REPRESENTATIVE FROM
ARKANSAS
The American Dream has long been a symbol of opportunity,
promising economic freedom, home ownership, and a better future
through hard work. However, for many American families today,
rising costs, housing supply shortages are making those
milestones increasingly difficult to achieve, and hence the
title of today's hearing, ``Priced out of the American Dream,''
reflecting that reality for many.
Affordability has become a serious challenge after years of
harmful Biden era policies marked by reckless spending and
inflation reaching 40-year highs, leaving households to absorb
the consequences of those higher prices and increased borrowing
costs. In 2024, we hit an all-time high for the cost of
building a single-family home, and it is only expected to grow.
Short rates set to fight persistent inflation are driving
up mortgage payments, and borrowing has become more expensive.
These pressures are squeezing household budgets and limiting
opportunity.
As the 2025 Financial Stability Oversight Committee annual
report makes clear, economic growth is essential to financial
stability. In a growing economy, rising incomes make debt more
manageable, standards of living improve, and the financial
system remains stable and resilient.
Since the start of President Trump's second term, we have
seen renewed economic momentum driven by pro-growth policies in
a clear, regulatory framework. Under the President's
leadership, the economy is back on track, reversing the damage
left by the previous administration and restoring confidence in
our financial system.
This stands in sharp contrast to the warnings predicted by
many across the aisle just before the President's inauguration.
In 2024, Moody analytics predicted that a Republican-controlled
government would lead to 3.5 percent inflation, 5 percent
unemployment, a recession, and a budget deficit in excess of 6
percent of gross domestic product (GDP). Those warnings were
echoed repeatedly by Democrats, who claimed that Republicans
would derail the economy. The data has conclusively disproven
those assertions. Inflation came in nearly a full percentage
point below forecast. Unemployment did not exceed 4.5 percent.
No recession materialized. GDP growth is on track for three
consecutive quarters above 3 percent, and the budget deficit is
projected to fall to 5.4 percent of GDP.
While the broader economy has improved, affordability
challenges that I outlined remain for many households. That is
why Republicans in this committee continue to introduce
legislation that address this challenge head-on. We have direct
solutions to improve the cost of living for all Americans.
Throughout the 119th Congress, we have unveiled legislative
proposals that work to reinvigorate our banking system, expand
access to credit, and remove unnecessary regulatory burdens.
Recently I introduced the Main Street Capital Access Act with
Subcommittee for Financial Institutions Chairman Andy Barr to
revitalize local bank formation and right-size regulation so
that banks can do what they do best: Lending to local
businesses and communities.
Late last year, Subcommittee on Housing and Insurance Chair
Mike Flood and I introduced and the committee advanced, with
the support of Ranking Member Waters, Mr. Cleaver, the Housing
for the 21st Century Act which reduces regulatory barriers in
making building homes and apartments--that are making that
difficult. Last night, the House advanced that bill by a vote
of 390 votes.
In December, the House also overwhelmingly passed
Subcommittee Capital Market's Chair Ann Wagner's Incentivizing
New Ventures and Economic Strength Through Capital Formation
(INVEST) Act with strong bipartisan votes of over 300 votes.
This legislation will strengthen our capital markets, promote
capital formation, and ensure that America's markets remain a
global leader.
President Trump has been clear about the importance of
addressing the cost of living for all American families, and
these bills reflect our shared commitment. Through our work on
housing, community banking, and capital formation, we are
dedicated to restoring affordability, expanding opportunity,
and making the American Dream fully attainable for all
Americans.
I look forward to our discussion today, our panel, and I
yield back.
I now recognize the gentlewoman from California, Ms.
Waters, for an opening statement.
OPENING STATEMENT OF HON. MAXINE WATERS, RANKING MEMBER OF THE
COMMITTEE ON FINANCIAL SERVICES, A U.S. REPRESENTATIVE FROM
CALIFORNIA
Ms. Waters. Thank you, Mr. Chairman.
$1.4 billion. That is how much the Trump family has
pocketed since Trump returned to the White House. Whether it is
through peddling crypto coins or through baseless lawsuits
against news media or Federal agencies, one thing remains
clear: The Trump family cashing in while everyday Americans are
struggling. Because of Trump's failed economic agenda, families
cannot keep up with the rising rents and shrinking housing
options. Workers are seeing their paychecks stretched more and
more as jobs grow less security and the dream of home ownership
slips further away, and small business owners struggle to
access capital and keep their doors open in an economy that is
only working for those at the top.
What is Donald Trump's response? He floats absurd ideas,
like a 50-year mortgage that would trap families in debt while
doing nothing to lower costs. He says he wants to cap credit
card rates, but he repeals limits on credit card fees and shuts
down the Consumer Financial Protection Bureau. Trump's actions
speak louder than his tweets.
At the same time, this administration is attacking Federal
programs, like Community Development Financial Institution
(CDFI) Fund, which helps small businesses access capital and
probably the biggest drain on our economy is Trump's reckless
and unlawful tariffs. They have raised the costs of everyday
goods like groceries and driven up the costs of building
affordable housing. You name it: lumber, steel, and other
construction materials all cost more. Why, Trump?
At the same time, the Trump Administration's cruel attacks
on immigrant workers are shrinking the construction workforce.
You do not have to be a stable genius to know that, when you
make building materials more expensive and deport construction
workers, fewer homes will be built. Exactly the opposite of
what we should be doing.
So let me ask a simple question that every American should
ask: Are you better off now than you were a year ago? Your
paycheck buys less. Rent is more expensive and job prospects
are less certain.
Committee Democrats see this crisis clearly, and we refuse
to look the other way. Now, last night, we worked with
Republicans to pass the Housing for the 21st Century Act. This
is a good first step, recognizing that we have an affordable
housing program. Can you imagine me and Mr. Hill worked
together, and we got something done? Wow. It happened but one
bill alone will not fix a crisis of this magnitude, nor can it
overcome the headwinds of Trump's terrible agenda.
What would really be helpful is if we could hear from the
Trump Administration officials charged with overseeing $7.6
trillion of the mortgage market but that is not going to
happen. Director Pulte is apparently too busy making false
allegations against Trump's political enemies, unlawfully
installing himself on the boards of Fannie and Freddie, and
pitching terrible and just plain dumb ideas like forever
mortgages.
Where is the Acting Director of the Consumer Financial
Protection Bureau (CFPB), Mr. Chairman? The agency that
returned $21 billion to Americans who have been ripped off by
Wall Street. The agency that used to fight on behalf of
veterans and students against predatory lenders. Well, Acting
Director Vought may be too scared to come before this
committee, and I am pleased to see several members of the CFPB
Union, National Treasury Employees Union (NTEU) 335, who took
leave to be in the audience today.
Mr. Chairman, America's families need a sustained Federal
investment in housing. We need strong oversight of consumer
financial products and services, so Wall Street follows the
rules. We need real accountability so that access to capital is
based on merit and opportunity and not wealth and connection.
Trump promised Americans a, quote, golden age, end quote but
everyone now sees that he really meant a golden age for the
Trump family, his family, and billionaire friends. Committee
Democrats instead are prioritizing hardworking Americans over
billionaires. We are demanding policy that lowers costs,
expands access to capital, and protects consumers. Put simply,
we want everyone to have a real shot at the American Dream. I
yield back.
Chairman Hill. The gentlewoman yields back.
Today we welcome the testimony of Mr. Brian Brooks, the
chairman and CEO of Meridian Capital Group; Mr. Kevin O'Leary,
chairman of O'Leary Ventures; Mr. Stephen Moore, co-founder of
Unleash Prosperity; and Derrick Hamilton, a university
professor at the New School and the chief economist at the
American Federation of Labor and Congress of Industrial
Organizations) AFL-CIO.
We thank each of you for taking time to be with us. Each of
you will be recognized for 5 minutes to give an oral
presentation.
Without objection, your written statements will be made
part of our record.
Mr. Brooks, we will start with you. You are recognized for
5 minutes.
STATEMENT OF BRIAN BROOKS, CHAIRMAN AND CEO, MERIDIAN CAPITAL
GROUP
Mr. Brooks. Well, Mr. Chairman, Ranking Member Waters, and
members of the committee, thanks for having me today. It is
great to see many of you again.
Most Americans know, as you said, Mr. Chairman, that
everything got more expensive over the past 5 years as the
country experienced the highest inflation since the 1970s and
house price inflation was dramatically worse than inflation as
a whole. Between 1991 and 2025, U.S. home prices increased at
literally twice the rate of background inflation and prices of
houses are compounded by high prices for credit. Interest rates
remain persistently high, and regulatory pressures have reduced
credit supply to a point that is almost as significant as the
problem of housing supply itself. So today I will focus on
several specific dimensions of this problem.
First, let me start by addressing the housing supply
deficit. We are about 5 million units short of what would be
required to support total housing demand in this country, and
one reason is the magical thinking of rent control. I live in
Los Angeles, where I recently saw a building on the side of a
decrepit--or a billboard on the side of a decrepit building
that literally says ``Rent control, an LA tradition since
1919.'' LA's housing cost has been one of the highest in the
Nation almost that entire time. Is this in spite of rent
control, or is it because of it?
In some cities with rent control laws, such as New York,
where my company is headquartered, regardless of a building's
operating expenses and maintenance or repair needs, not only
are annual rent increases capped for existing tenants, but the
rent cannot even be increased when an old tenant moves out, and
a new tenant moves in. As a result, building owners, including
many of my firm's clients, can predict with incredible accuracy
the day on which the expenses of the building will exceed the
building's income. On that day, there is no further capital
available to perform necessary maintenance, meaning that small,
deferred repairs turn into major structural problems. As we
learned in 1970s New York, the building then fails. It is taken
over by either the bank or the city, and the disaster becomes a
taxpayer problem without any tenants being any better off.
Rent control deters investors from building new housing
units because they cannot recoup their investment. So rents
rise in those cities due to shortages while rents are stable or
even falling in places without rent control laws, places like
Austin, Dallas, Denver, Phoenix, which have experienced
building booms.
Then there are the local environmental, permitting, climate
mandate, zoning rules. I mentioned, again, I live in Los
Angeles, about 5 miles from the Eden Fire burn zone that
destroyed almost 7,000 structures. More than a full year after
that devastation, construction has begun on only about 7
percent of those burned-out properties, and even fewer in the
Palisades Fire area. LA's complicated overlapping rules on an
array of environmental, fair housing, energy efficiency, and
similar issues, may not explain all of that slow-rolling
tragedy, but it is undeniable it is a significant part of it.
The Federal Government can actually address all of this.
Some of what this committee passed in the Housing for the 21st
Century Act is a great start, but there is more. The Housing
and Urban Development Department distributed tens of billions
of dollars in State and local grants. Those funds require a
finding that local policies promote the construction and
availability of housing. Housing and Urban Development (HUD)
could declare that some of these rent control and permitting
ordinances in fact reduce the construction and availability of
housing and refuse to subsidize States that pursue these
policies. HUD also has the power under Section 8 and various
other statutory provisions to revoke approval or withhold
funding to localities that pursue policies that reduce the
supply of housing. HUD could further consider preempting State
and local rent control, environmental review, climate change,
and other anti-housing laws to the extent that they would apply
to HUD-insured mortgages. The affordability situation,
especially in our Blue coastal cities, is dire enough that all
of these options have to be considered at this point.
Now, let us talk for a moment about Federal banking policy,
something that all of us know well. Since President Obama
signed the Dodd-Frank Act in 2010, and accelerating during the
last administration, Federal banking policy has sharply reduced
banks' role in housing finance. Nonbanks currently originate
the large majority of all mortgages, and those loans that are
made by banks usually wind up on the government balance sheets
of Fannie Mae, Freddie Mac, Ginnie Mae, or the Veterans Affairs
(VA). At this point, only about 10 percent of mortgage credit
risk is actually born by the private sector.
Dodd-Frank is partly to blame since it imposed a series of
rules that disincentivize mortgage lending as a banking line of
business but, separately, bank supervision, including by my old
agency, the OCC, led banks to be very wary of lending to
apartment owners and developers. Time and again, those of you
who speak to community banks will hear the story of how, over
the last 5 years, the Office of the Comptroller of the Currency
(OCC), the Federal Deposit Insurance Corporation (FDIC), and
the Federal Reserve have gone into banks and have declared that
performing loans that have never had a payment default should
nonetheless be charged off in an effort to make sure that they
are not embarrassed by another Silicon Valley Bank failure
again. That overcorrection has drawn community banks out of the
sector, forcing the Federal Government to deal with the
situation.
In my written testimony, I talk about a couple of other
topics, which I encourage you to talk about today, including
Fannie Mae and Freddie Mac and their future. I appreciate the
committee's time. Thanks so much.
[The prepared statement of Mr. Brooks follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Chairman Hill. Thank you, Mr. Brooks.
Mr. O'Leary, you are now recognized for 5 minutes for your
oral presentation.
STATEMENT OF KEVIN O'LEARY, CHAIRMAN, O'LEARY VENTURES
Mr. O'Leary. Thank you.
Chairman French Hill, Ranking Member Maxine Waters, and
members of the House Committee on Financial Services, thank you
for inviting me to participate in today's important hearing.
I want to use my opening statement to shine a light on an
issue that impacts millions of Americans. Small businesses are
the heart of the American economy. Companies between 5 to 500
employees create 64 percent of all jobs in America every year.
If you take into account their use of supply chains to
distribute their goods and services, they may be responsible
for over 70 percent of all jobs created. Yet, when we create
policy, small businesses are often forgotten and instead, we
dole out billions of dollars to the S&P 500 companies, who
rarely have problems accessing capital. As an advocate for
small business, I see this as a gross miscalculation of
resources and undermines a growing and competitive economy,
which we all want. Affordability is one of the biggest
challenges facing small business today and the millions of
people they employ.
A large portion of increased input costs are the result of
radical changes in tariff policy. For decades, tariff policy
has been designed to be reciprocal. For example, if a European
country imposes a 10 percent VAT, value added tax, on American
goods and services, traditionally they would have a 10 percent
tariff imposed on their goods sold in the U.S.
Over the last 9 months, the administration has elected to
use tariff policy as a political tool. I am not opposed to
this. I am on the record suggesting a 400 percent tariff on
China until they comply with the rules of the World Trade
Organization (WTO) that they entered into in the year 2000 and
to provide protection for Intellectual Property (IP) ownership,
like mine, along with resolving a long list of other grievances
held against the Chinese Communist Party (CCP).
The U.S. is still the world's largest and most successful
consumer economy. So the Chinese have no option but to deal
with U.S. demands. However, implementing punitive tariffs on
other friendly nations and leaving them in place indefinitely
has had an impact on American families, their businesses, and
their customers.
When tariffs are used for political leverage, the tariff
percentages could change dramatically from day to day during
negotiations. For example, the U.S. initially had imposed a 39
percent tariff on Swiss imports, but the tariff rate eventually
landed at 15. During a brief period of instability, which has
only been months, most businesses simply absorb the cost
increases and refrain from passing them onto their customers.
However, some businesses cannot do this indefinitely and may
need to adjust their selling prices up in order to stay in
business.
I suggest that the current tariff policy needs some, as I
call it, fine-tuning. The main issue is this: Why levy tariffs
on scarce goods and services? For example, farmers need potash
to fertilize crops. Why put a 25 percent tariff on potash when
there is not enough in the U.S. to begin with? The same could
be said for low-supply commodities, such as bauxite, aluminum,
and softwood lumber.
The Trump Administration has already taken a step in this
direction. Last November, the President signed an executive
order reducing tariffs on crops that are difficult to produce
in the U.S., such as coffee, tea, and tropical fruits such as
bananas and mangos.
Housing affordability is a pain point almost in every
State. A major issue, as you just heard from Brian beside me
here, is permitting. One glaring obvious problem is Los
Angeles. If you believe the deficit--as Brian mentioned is 5.
Goldman Sachs is out there with 3 million deficits of houses.
There are tens of thousands of homes that were burnt down to
the ground in LA recently, and virtually zero reconstruction
has commenced. Why? This is due to antiquated regulations and
bad policy. This is a self-inflicted wound, and it needs to be
resolved immediately. Also, providing more Federal and State
land to build housing on will also increase supply and enhance
affordability.
Another policy I want to address involves the digital asset
ecosystem. In 2025, the Guaranteeing Essential National
Infrastructure in US-Stablecoins (GENIUS) Act was enacted,
modernizing U.S. payments and settlement systems by
establishing a clear, regulatory framework for the operation
and issuing of stablecoins. Many small businesses, notably the
ones I have invested in as well, are interested in using
stablecoins to reduce transactional costs. In fact, they could
bypass credit cards costing 2.5 percent. However, for
stablecoins to reach their full potential, comprehensive
digital asset marketing structure legislation, like the Digital
Asset Market Clarity Act (CLARITY Act), must also be enacted.
Without clear rules of the road, digital assets, including
stablecoins, cannot fully recognize their potential. The Senate
is currently debating the CLARITY Act, with one of the key
issues centering on paying interest on stablecoins.
The hallmark of the American economy has never been more
about regulation, and really it should be about innovation.
Enacting the CLARITY Act will enhance sufficiency in the
financial services sector and help reduce transactional costs
and free friction up.
[The prepared statement of Mr. O'Leary follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Chairman Hill. Thank you, Mr. O'Leary. Your time has
expired.
Mr. O'Leary. Thank you.
Chairman Hill. Looking forward to the question period.
Mr. Moore, you are now recognized for 5 minutes for your
oral remarks.
STATEMENT OF STEPHEN MOORE, CO-FOUNDER, UNLEASH PROSPERITY
Mr. Moore. Thank you very much, Mr. Chairman. It is an
honor to be able to testify before you all today.
I just wanted to make a few opening points for this
hearing.
First, ``affordability'' is really the buzzword today, and
this housing issue is obviously intertwined in the issue of
affordability. I have some good news to report to the members
of this committee, which is that, if you look at what has
happened in the last 12 months, we have started to turn a
corner on affordability. So what we found--and I have been
tracking the Census Bureau median income data. Median obviously
is the people in the exact middle. If you look at what has
happened with real median income over the last 12 months, that
number is up $2,400. So that is very good news. What that is
saying is that people's incomes are rising faster than
inflation rate, finally. So we turn the corner there. That is
good news.
By the way, it is also true that, if you look at the people
in the top 25 percent of income--I just gave the median and
then the people in the bottom 25 percent of income, even people
in the bottom 25 percent of income, the poorest Americans have
seen about a 16 percent increase in real terms in the past
year. So you made the point that I think is so critical, Mr.
Chairman, about economic growth and economic growth really is
the solution to so many of our problems, and it is certainly
the solution to affordability.
Point number two is that there is good news and bad news on
this housing issue. It is almost a conundrum. A home is an
asset. For most Americans, the primary asset that they own is
their home. For people--for the 60 percent or so of Americans
who are homeowners, rising home values is a good thing, not a
bad thing. I have always said, if you think rising costs--
prices of homes is a bad thing, there is one thing that is a
lot worse than that, and that is falling home prices. We do not
want to see that. That is what happens during great depressions
and during bad times.
One of the reasons that we are seeing--this is good news,
by the way, in terms of what is going on. In my testimony,
there is a chart that I think is really fascinating, that we
really have become a Nation of homeowners and that is the
equity that Americans have in their homes has continued to rise
over the last 5 or 6 years, which is good news. Today the
average equity that Americans have in their homes is about 70
percent. That means they own 70 percent of the home, and the
bank only owns 30 percent. That is way up from, say, 2010, when
people had less than 50 percent of equity.
So this is good news that people are being able to own
their homes and for homeowners, it is great news. The problem
is--so I own my home--when I see the value of that goes up, I
cheer but then my kids--I have three kids that are in their
late 20s and 30s--it is bad news because they cannot own a home
and that is the kind of conundrum you are dealing with.
Third point. This is really critical. Please, please,
whatever you decide in terms of policy with respect to housing,
please, I am begging you, do not forget the lessons of what
happened in 2008, when we crashed the economy, one of the worst
downturns in the economy since the Great Depression and this
was a result of really bad, bad housing policy. I remember, Mr.
Chairman, I was in this very room testifying, oh, about 20
years ago and one of the economists came in--honest to God
truth. He said the chances that Fannie Mae or Freddie Mac would
ever fail were one in a million. One in a million and, of
course, 5 years later, Fannie Mae needed a $200 billion
bailout. So Fannie Mae and Freddie Mac are not the solution to
our problem. They are the ones that created the crisis in the
first place.
The other thing that is really critical to remember about
what happened in 2008 is the number one factor behind people
defaulting on their loans was the down payment on their loan.
So people with low down payments tended to be the ones who
defaulted. People who had equity in their home with higher down
payments did not and so I am very wary of policies that tell
people lower, lower, lower down payment because those are the
people most likely--and by the way, you do not do anyone a
favor by putting them in a home that they cannot afford. You
know, there is nothing worse than losing your home because you
cannot afford it. So that is an important point.
Finally, and maybe most importantly, is, if you look at
what is happening with housing prices in the United States,
housing in terms of where homes are affordable and where they
are not, it is mostly the big Blue cities where prices are very
high. So if you look at my testimony--and I am almost done
here--but I will just show you that the cities that have the
highest----
Chairman Hill. Mr. Moore, we will consult your testimony.
We thank you and we----
Mr. Moore. Yes. New York, San Francisco----
Chairman Hill. Thank you. Your time has expired.
Mr. Moore [continuing]. those States have----
[The prepared statement of Mr. Moore follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Chairman Hill. Your time has expired. We will get into that
detail with the questions. Thank you very much for your
presentation.
Professor Hamilton, you are now recognized for 5 minutes
for your oral presentation.
STATEMENT OF DARRICK HAMILTON, UNIVERSITY PROFESSOR, THE NEW
SCHOOL, AND CHIEF ECONOMIST AFL-CIO
Mr. Hamilton. Good morning, Chairman Hill, Ranking Member
Waters, and other honorable members of the House Committee and
Financial Services. My name is Derrick Hamilton. I serve as the
Henry Cohen University Professor of Economics and Policy and
the founding director of the Institute on Race, Power, and
Political Economy at the New School, and the chief economist
for the AFL-CIO.
I am here today in my capacity as a scholar to discuss
rising costs and access to financial services. Rooted in these
issues are asymmetries in power and economic agency. What has
come to be labeled as the affordability crisis is the result of
public infrastructure that is over-indexed on profit and
speculation and under-indexed on investment in the American
people. Over the past four decades, the top 1 percent of
households have experienced a tenfold increase in their wealth
whereas the bottom have not received that, resulting in the
bottom 50 percent of Americans holding about 2 percent of our
Nation's vast wealth.
These conditions are not happenstance. They are the result
of policies that concentrated capital and power, policies that
prioritize speculation and profit over productive investment,
and policies that treat people as costs to be contained or
managed.
For instance, last summer, the budget reconciliation law
cut Medicaid, food assistance, subsidies to healthcare, student
loans, and other essential programs while diverting nearly $4
trillion of our public investment by way of our TAX CODE to the
wealthy and corporate sectors. Our infrastructure should first
and foremost serve and invest in the American people. People
are more than labor inputs to a firm's production process or
consumer agents to whom resources might be redistributed to
address inequality in a charitable sense. When properly
resourced, people are the innovative, productive agents that
make dynamic contributions that benefit themselves, the economy
overall, and they promote healthy, tranquil, safe, and
inclusive environments. That should be the purpose of our
economy.
Authentic freedom is grounded in resources. These resources
include housing, healthcare, banking, and financial services,
reproductive autonomy and agency with regards to family
formation, the right to unionize and collectively bargain, good
jobs, capital foundations, access to quality education from
grade school through college, and a free mobility throughout
society without the threat and the tension of--a threat of
detention and bodily harm from a state-sanctioned terror
because your identity is linked to a stigmatized group.
Public investment and the capabilities of the American
people empower us against predation, address our affordability
crisis, and generate positive externalities and productive
macroeconomic multipliers that benefit our economy overall.
This approach is not new to the American zeitgeist. Between
1948-1979, as a result of government policy, accompanied by
strong unions, American productivity more than doubled while
wages rose at 90 percent. That reflected an almost 1-to-1
relationship between growth and worker prosperity and clearly
firms benefited too.
In contrast, the period between 1979 and 2025, a period
defined by supply side-economics that emphasized deregulation,
government outsourcing, privatization, corporate tax cuts and
subsidies, and an outright assault on unions and collective
bargaining, productivity continued to rise, albeit at a slow
rate, but wages only rose by 33 percent.
At a time when trust in Congress is near historic lows, we
have an opportunity to demonstrate a governance approach that
centers people as the purpose of our economy and the primary
mechanism to achieve that purpose. To address our affordability
crisis, perhaps we should put our trust in the American people
with the resources and public infrastructure to match. Invest
in our human capacities, our democratic institutions, our
shared prosperity. Choose a governing paradigm that recognizes
people as the best infrastructure and live up to the creed of a
multiracial democracy with inclusive prosperity. Thank you.
[The prepared statement of Mr. Hamilton follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Chairman Hill. Thank you, Professor.
We will now turn to member questions. I recognize myself
for 5 minutes of questions.
Steve Moore, let me start with you. Chairman Powell
recently said that the reason why consumers are angry about
inflation is because of the increase in prices that occurred in
2021, 2022, and 2023 or, in other words, consumers are still
feeling the higher prices generated from that inflation shock
that some of you mentioned in your testimony.
He stated, though, that as real incomes rise, which is a
point you made, people will feel better over time. So I agree
with that and we do not want to rehash in here. Members of this
committee, some on both sides of the aisle but mostly on the
Republican side of the aisle, in the fall of 2020 said, ``Let
us get back to business, take the foot off the gas of the
monetary policy expansionism'' and we did not support applying
6--trillion dollars more in fiscal stimulus in the spring of
2021. We thought that was over the top, vis-a-vis the pandemic
and the recovery that we had already witnessed due to what was
a very V-shaped recovery but you make a good point about real
wage increases, and I think the Big, Beautiful Bill signed into
law last year speaks directly to for seniors, for overtime, for
tips, for taking the standard deduction, for doubling the child
tax credit, produce some of that real wage increase.
Can you reflect on how you see that coming to pass this
year as Americans open up their notice from the Internal
Revenue Service (IRS), and they see a bigger refund this year?
Can you reflect on what you think that could do for the macro
economy this year?
Mr. Moore. Thank you, Mr. Chairman.
Chairman Hill. Mic.
Mr. Moore. Quick responses to that.
Number one, yes. You are quite right that the inflation
that--the American people are angry about inflation, no
question about it. They are very angry. Every poll shows that.
They are angry about the cost of healthcare. They are angry
about the cost of housing. My wife is angry about the cost of
groceries. So it is at a boiling point. One thing I would sort
of remind people is, yes, 84 percent of that inflation that
people are feeling today happened in 2021, 2022, 2023, and 2024
under the previous President. Trump is right. Inflation has
actually come down. Now, we are not where we need to be.
Chairman Hill. Yes.
Mr. Moore. We are at about 2.7, 2.8 percent. We want to get
that down to 2 percent or below, but the trend is good. I think
you heard from Secretary Bessent a week or two ago saying that
the trend right now is headed to 2 percent. So that is the
first most important point.
The second thing I just want to quickly say is with respect
to how can we bring housing prices--how can we make housing
more affordable? Clearly I think we could all agree that the
mortgage interest rate is a big factor on whether people can
buy a house. By the way, when I graduated from college, the
mortgage interest rate was 17 percent. Nobody could afford to
buy a house during those high inflationary times. What we are
seeing now is that inflation is coming down and that will make
affordability better but the point I am making is the single
most important factor in bringing down the 30-year mortgage
rate is the inflation rate today and the expectation of
inflation----
Chairman Hill. Thank you----
Mr. Moore [continuing]. in the future and that is something
even President Trump, who I strongly support, he thinks that if
the Federal Reserve (Fed) lowers short-term rates that is going
to bring long-term rates down. That is not necessarily true. So
let us concentrate on keeping prices stable and the dollar
strong.
Chairman Hill. I appreciate that perspective.
Mr. Brooks, let me turn to you on the subject of--I agree
with that macro issue so much, and real wages does a lot to
help on the affordability issue. We have put in our package we
passed last night with 390 votes--we also freed up banks access
to a greater stream of deposits, lowered and tailored
compliance costs for our community banks because they make 60
percent of our one to four family construction loans across the
country, banks under 10 billion.
Can you talk a little bit, with your executive branch
experience, about the importance of tailored regulations?
Mr. Brooks. Thank you, Mr. Chairman. It is a great
question.
The idea of treating relatively small banks the same as
J.P. Morgan is something that we have had to grapple with since
2010 in the Dodd-Frank Act and in Basel III. Freeing community
banks to do what they do best, which is to make loans based on
a relationship basis to credits that they truly understand with
borrowers in the community, whether that is purchase money
mortgages or construction loans or whatever, it is a really big
deal.
I think the legislative move that the committee made is
terrific. I would go further and say there needs to be
oversight of the banking agencies to make sure that the
supervisors inside of those agencies are not penalizing banks
for making the very loans that the committee wants them to
make.
Chairman Hill. Right. I do hope that, under the leadership,
now that we have all the Trump Administration agency heads
confirm that they do that, harmonize directed leadership
management. Thank you, Mr. Brooks. I yield back.
I recognize the ranking member, Ms. Waters of California,
for 5 minutes of questions.
Ms. Waters. Thank you very much, Mr. Chairman.
Professor Hamilton, during the pandemic, there was a lot of
bipartisan support for small businesses. We had the Paycheck
Protection Program that made sure that community financial
institutions, like the CDFIs and Minority Depository
Institutions (MDIs), received an allocation, and small
businesses were able to benefit. Since then, we have seen Trump
and Republicans attack a number of programs and safeguards that
help small businesses. For example, for decades, CDFI Fund has
received bipartisan support for all of the good ways it has
supported CDFIs across the country, including in urban and
rural communities. CDFIs played an important role in providing
Paycheck Protection Program (PPP) loans to small businesses,
especially after biggest banks turned them down but now Trump
wants to close down the CDFI. We have to fight. We have to
fight him on this.
Professor Hamilton, will that not hurt small businesses
trying to access capital and affordable loans to expand their
businesses?
Mr. Hamilton. Absolutely, Ranking Member. It will not offer
precision by which we need to ensure that we have economic
inclusion for especially minority businesses that traditionally
have not been included in the full prosperity of the American
economy. So these programs have relationships. They have
capabilities of steering finance in a way to promote economic
inclusion, which should be consistent with achieving that
American Dream and a melting pot.
Ms. Waters. Thank you very much.
As a matter of fact, speaking about the PPP program, the
big banks basically took care of their concierge clients, and
used up all the money in the beginning. We had to come back,
Nydia Velazquez and I, Nancy Pelosi, even Mnuchin, to come up
with a huge allocation to get to minority-owned banks and also
for small businesses. They come here, and they talk about small
business and what they try to do is get us believing that they
are here representing small business but in essence, what they
are doing is bringing the same old Republican arguments about
rent control and other kinds of things, getting away from what
we are trying to do for small businesses.
Professor Hamilton, going back to former President Nixon,
the Minority Business Development Agency, that is the MBDA,
accepts small businesses owned by people of color and were
ignored by the traditional financial system. These
entrepreneurs could go to the MBDA and get legal and technical
advice on how to run their businesses or access loans and
capital to operate. If Trump closes MBDA, will it not be harder
for small businesses to access affordable credit?
Mr. Hamilton. Yes. The program was designed with a purpose
in mind, and we have not completely fulfilled that purpose. So
now is not the time to turn away from it. Now is the time to
amplify it.
Also, if we go back to the point that you made with regards
to the PPP program, imagine the counter factual if we did not
have it in place. Imagine how many workers would have lost
their job in the midst of a pandemic if this Federal Government
did not ensure that if employers were to keep their workers
employed, that they would receive forgivable loans.
Then the points you raise. We want to make sure we have an
inclusive economy so to pivot in the midst of that allocation
to go to CDFIs to make sure that businesses that might not have
been as traditionally banked with the larger banks would also
be able to keep their workers employed was what was good for
America.
Ms. Waters. Thank you so very much.
Just quickly, Trump and Republicans also want to stop the
Consumer Financial Protection Bureau from collecting data on
small business lending. Section 1071 of Dodd-Frank, which I and
Small Business Committee Ranking Member Velazquez led in
drafting, requires banks to collect the small business loan
data. It was finally implemented by the CFPB under Former
Director Chopra's leadership, but Trump CFPB is seeking to
delay and narrow this rule. As an economist, how does the lack
of transparency and data on who gets small business loans and
what it rates allow discrimination to persist?
Mr. Hamilton. Information is power and then also hidden
information allows for discrimination, allows for things to be
not transparent so that we can address it.
Indeed, the CFPB, we should also consider that origins of
that great agency that we have with our government, it came
about as a result of recognitions of a financial collapse----
Chairman Hill. Thank you, Professor. The gentlewoman's time
has expired. I appreciate your testimony.
Ms. Waters. Thank you.
Mr. Hamilton. Thank you.
Chairman Hill. The gentleman from Oklahoma, Mr. Lucas, the
chair of our Monetary Policy Task Force, you are recognized for
5 minutes.
Mr. Lucas. Thank you, Mr. Chairman, and thank you to all of
our witnesses for being here today.
The landmark reconciliation bill that Congress passed last
year included a number of provisions to update and strengthen
the farm safety net. While farmers back home wait to see the
benefits of these changes, the President announced the Farmer
Bridge Assistance Program set to hit producers' pockets by the
end of this month.
Mr. Moore, I have waited a very long time to ask you a
question. So, in a very concise way, what can the farm economy
look forward to with the administration and Congress working in
harmony on the economy?
Mr. Moore. Well, if the question--sorry. If the question is
what can you all do to--first of all, we have a healthy economy
right now. I mean, it is an amazing economy, one of the best--I
have been in this business for about 40 years. This is about as
good as it gets when you have all-time highs in the stock
market. You have got rising median incomes. You have got
falling gas prices. You have got inflation headed to 2 percent.
I mean, it is a good picture, and we should all feel very good
about that.
The one piece of advice I would give to you all in terms of
how you can promote more housing availability so that young
people can buy a home is to index the capital gains tax for
inflation on residential housing. So, if you look at, over the
last 40 years, we have had about a fivefold increase in the
value of houses but about a 300 percent increase in inflation.
So a lot of the people--what has happened, people are locked in
their homes. People who are in their 60s and 70s, the baby
boomers who may want to downsize, may have a million and a half
dollars of equity in their home; they literally are locked into
their house. They cannot sell it because, if they do, they are
going to pay a massive capital gains tax, mostly due to
inflation. It is an unfair tax, and we could free up millions
of homes if we allowed people to index that for inflation. By
the way, it is just not fair to tax people on an inflationary
gain anyway.
Mr. Lucas. Absolutely. I would note when I was in State
legislature, we had a piece of legislation dealing with sales
tax. The Oklahoma Tax Commission testified before the tax and
revenue committee that I sat on that 40 percent of Oklahoma
City's sales tax revenue was generated by non-Oklahoma City
residents, which said to me that rural America drives an
important part of urban America's economy and we have to look
at that whole package, and clearly the administration is. Thank
you.
Mr. Brooks, you have testified that the excesses of the
Dodd-Frank Act have significantly diminished lending by banks.
What should the committee look at scaling back to ensure that
banks are able to lend to grow the economy?
Mr. Brooks. Well, Mr. Lucas, thank you for that question.
The Dodd-Frank Act did a number of very specific things
that made it hard for banks to be in this asset class, and some
of them were directly in the statute and some of them were in
Basel III as the U.S. later adopted it.
Let me just begin with the treatment of mortgages and
mortgage servicing rights on bank balance sheets. The
quintessential thing that banks do, possibly the most
fundamental thing that banks do is they take short-term
deposits, and they turn them into long-term loans for home
ownership. We all saw ``It is a Wonderful Life.'' That is what
a bank does.
In Dodd-Frank, capital stress tests and capital ratios were
established that disincentivize long dated assets, like
mortgage, and makes it very expensive for a bank to hold a
mortgage on its balance sheet. As a result, the vast majority
of mortgages a bank makes today go to Fannie Mae and Freddie
Mac and thus are taxpayer liabilities. They are not bank
liabilities. So looking at capital ratios and stress tests
specifically as they apply to mortgages is a way of tailoring
Dodd-Frank without giving up the capital gains. That part is
really important.
The only other thing I would tell you is mortgage servicing
rights (MSRs), that intangible economic strip of a mortgage
that the banks who make the mortgage retain, became highly
uneconomic to hold because banks had to hold capital against
those MSRs at a very high rate. So those things made it very
tough for your local 1 billion dollar bank in Oklahoma City to
be in the business.
Mr. Lucas. Continuing my thought, Mr. O'Leary, in the time
I have left, how would the INVEST Act scale back red tape and
unlock capital for small and growing businesses?
Mr. O'Leary. Getting access to capital is the whole deal,
actually, because if you see how small businesses--let us take
a typical 50 million dollar business that is selling goods and
services. Their large customers--maybe a Walmart or Target,
whatever. When they go to their local bank or regional bank and
say, ``Look, I am holding $5 million of receivables on Walmart;
can you give me a rotating loan,'' rarely do they get that. So
they go to the hard factoring market, which today is between 17
and 23 percent. That is effectively all the profit they are
going to make because on average they make 15 percent pretax.
Sometimes it is punitive, but they have to go to those markets
to afford the next order to the next Walmart and so they start
with 200 stores. They get to 2,000. The system is very broken
because they are the best credit risk----
Chairman Hill. The gentleman's time has expired.
Mr. O'Leary.--and Walmart and Target, and, and, and, and
and----
Chairman Hill. The gentleman's time has expired. Thank you
so much.
Mr. Lucas. Thank you, chairman.
Chairman Hill. Appreciate that.
The gentleman from California, Mr. Sherman, who is the
ranking member of our Capital Markets Subcommittee. Mr.
Sherman, you are recognized for 5 minutes.
Mr. Sherman. First, Mr. Chairman, I would ask unanimous
consent to include in the record a letter we received from the
CFPB union NTEU 335 urging Congress to, among other things, to
restore CFPB's funding. Some of the members of that union took
their own time to be here. We welcome them.
Chairman Hill. Without objection.
[The information referred to can be found in the appendix
on page 88.]
Mr. Sherman. Thank you.
A number of Republicans in this room have said the economy
is wonderful and Republicans deserve the credit. Please, please
continue to say that.
Mr. Trump promised us that, if we elected him, things would
be affordable, and they are not. There are two things that we
could do to make things more affordable, many things, but two
of them are to restore the CFPB, which not only punishes those
that rip off consumers but, more importantly, prevents others
from doing so. Second, I will be introducing legislation soon
to regulate the price of all pharmaceuticals because they are a
monopoly, and they are a necessity.
One of the focuses that I thought would be here on a
building--bills discussed for this hearing or listed is the
idea of having large companies own single-family homes. I know
it sounds good to say that should be prohibited, and I look
forward to studying this market, but I will point out that only
0.6 percent of the single-family homes are owned by these large
landlords, and we do need at least some homes available for
rent. I represent the UCLA area. We have visiting professors.
We will not be able to get them to come from Harvard to UCLA
for 1 or 2 years if they are going to have to be in an
apartment.
I would also point out that these firms in effect act as a
backstop for builders. They build a lot of homes. They are not
sure they can sell them to consumers, and they have got a
backup opportunity with those in this industry. Finally, an
awful lot in this industry actually build the homes themselves.
Mr. O'Leary, thank you for pointing out the great travesty
of these crazy tariffs. They are not for fairness. They are not
for opening up other markets. We have imposed tariffs on coffee
and bananas just to raise a lot of revenue. We do not produce
coffee and bananas here. We should tax people based on their
ability to pay, not their proclivity to have coffee and
bananas.
John Burns, an economic consultant, indicated that the
tariffs on building materials are raising the price of
construction in this country by 5 percent. I am the only Member
of Congress that actually got to confront the President face to
face. That was a year ago. I begged him to exempt building
materials from this tariff insanity. He said he would consider
it. I guess he is still considering it because he is not doing
it.
Mr. Moore, you are right that we should not have Fannie and
Freddie the way we did back then. We do not. We have Fannie and
Freddie as government agencies where they do not face the
peculiar circumstance where they can take a lot of risks, make
a lot of money for their shareholders, or socialize the
downside.
Okay. Section 8 housing vouchers are one of the most
important ways we provide for housing but, in some cities, you
just cannot find a place that will rent to you with a Section 8
housing voucher and in some cities, half of all the new voucher
recipients return their vouchers unused.
Dr. Hamilton, what do we do to make the Section 8 program
work?
Mr. Hamilton. We should require people not to be able to
discriminate on the basis of whether they--someone has a
Section 8 voucher or not. That is a huge problem. Why should we
exclude people based on a government program intended for them
to get access to housing?
Mr. Sherman. Are there regulatory burdens imposed on those
who participate in the program that would discourage them?
Mr. Hamilton. Are there regulatory burdens imposed?
Mr. Sherman. Yes.
Mr. Hamilton. Decent homes. To some extent, we require that
there are quality homes that the people have access to, which I
think is a good thing.
Mr. Sherman. Thank you.
Studies indicate that 24 percent of the cost of a new
family home, single family, and 40 percent of the cost of
multifamily development is attributable to regulatory cost at
the local, State, and Federal levels. Mr. Moore, what can we do
to change the regulations and the zoning so that we can build a
lot more units, especially apartment units?
Mr. Moore. Well, Congressman, unfortunately, you all here
in Congress do not have a lot of authority over what the cities
are doing with zoning, but I am a big opponent of zoning. I
think it does--there is no question it restricts--it is a ``not
in my backyard'' kind of phenomenon, and it is something that
is really restricting the availability of homes.
Mr. Sherman. One way we can push them in the right
direction is the Yes in My Backyard Act, which I believe is
part of the package we passed yesterday. I yield back.
Chairman Hill. The gentleman yields back.
The chair recognizes the chair of our Capital Markets
Subcommittee. Mrs. Wagner, you are recognized for 5 minutes.
Mrs. Wagner. Thank you, Mr. Chairman. I thank our
witnesses.
The United States is a country of entrepreneurs and
innovators, trailblazers who turn ideas into successful
businesses, mom-and-pop shops that grow from literally a single
store into thriving enterprises. These are the individuals who
have made the United States the strongest economy in the world,
and their hard work deserves our support.
The truth is, however, that capital is not easy to access
for many small businesses across the country, especially in the
Midwest. I hail from the ``Show Me State'' of Missouri, so I
know, and other regions away from the big cities on the coast.
As chair of the Capital Market Subcommittee, one of my main
goals has been to address this lack of access. As you said
earlier, Mr. O'Leary, it is the whole deal, access to capital.
That is why I led the INVEST Act, a package of 22
bipartisan bills that will strengthen our capital markets,
expand investment opportunities for everyday Americans, and
provide greater access to capital for Main Street businesses.
Mr. O'Leary, as an angel investor on Shark Tank and the
chairman of O'Leary Ventures, you have invested millions of
dollars in dozens of companies located across the United States
over the last 16 years. In working with early stage startups,
investing both your time and money in up-and-coming companies,
you have direct experience leading with the challenges that
these businesses face.
Mr. O'Leary, when you work with early stage companies, what
are some of the main challenges you hear about gaining access
to capital?
Mr. O'Leary. Between 1-and 5 million in sales, it is
virtually impossible today. It really is. The challenge is
that, right after about a million, we stop selling your
grandmother and your cousins the product, and people start
buying it because they want it. It may even be successful on
social media acquiring customers. That is the time when you
want to support these nascent entities because they have proven
their product.
So one problem is, when they get to 5 million, that is what
generally they need to expand both on the employee base, and
they need more capital for inventory because that is just at
the time when the large, big box retailers, which still
represent 50 percent of sales, including Amazon, require
inventory. They are not going to receive cash on that for 60
days. I talked with the factory market.
There is another problem, and I brought this up when we
were having China hearings. Exactly at 5 million run rate on
Amazon for any American consumer good product, that is when the
Chinese knockoffs hit. What you see, and it comes on Alibaba,
that IP is stolen--and I have been talking about this for
years----
Mrs. Wagner. Well, I do not have time to let you talk about
it for years, sir, so----
Mr. O'Leary. Yes. It is stolen, and it shows up at 60
percent the cost of innovation.
Mrs. Wagner. I hear you. I hear you and we have addressed
some of these issues in the INVEST Act. You mention the INVEST
Act in your written testimony. From your experience working
with companies that rely on private market investors, how could
the reforms included in this package help unlock capital,
increase competition, and improve options without requiring
additional government intervention or a subsidy?
Mr. O'Leary. Probably 40 percent of the friction is the
regulation and the challenges at the regional bank level. It
really is. If you could get that red tape gone, if you could
deregulate it, make it easier, most of these communities would
support their entrepreneurs. Even in small towns, they would do
it because they can see the effect of growth. I mean, they
watch these--whether it is a car dealer or a dry cleaner or a
bakery, whatever it is, it is working.
Mrs. Wagner. In talking about growth, as other nations move
aggressively to attract capital, U.S. risks falling behind, and
we are, if our markets remain too costly or inaccessible for
growing companies.
Mr. O'Leary, how essential are capital formation reforms
such as those in the INVEST Act to maintaining U.S. economic
leadership and driving long-term growth, as you have talked
about?
Mr. O'Leary. Well, if you look at the data, 70 percent of
jobs are created by the businesses you just detailed and yet
they virtually get no support in the large acts that are
created, whether it is the infrastructure act or whatever in
the last 4 years. I have read those acts. They are telephone
books. There is nothing in there for small business and the
point is, why would you not want to support at least--I would
argue--70 percent of capital should be made available and--
because 70 percent of the jobs come from there----
Mrs. Wagner. My time has expired. I yield back. We have
done that in the INVEST Act, and I thank you, sir.
Chairman Hill. I thank the gentlewoman.
The chair recognizes the very distinguished gentleman from
Georgia, Mr. Scott. You are recognized for 5 minutes.
Mr. Scott. Thank you, very special chairman of our
committee.
Now, Professor Hamilton, I first want to thank you for
joining us. Every day, the dream of owning a home in Atlanta
slips further out of reach for thousands of families, and in
our 2025 Atlanta Regional Commission Survey confirms what many
already feel. Number one, housing affordability is not just a
talking point anymore. It is the top concern for our
constituents, affecting employment, education, and economic
stability.
Mr. Scott. In our Atlanta regional survey, the respondents
pointed to investors who buy and rent homes as a main cause of
this affordability issue.
Another major factor cited in this report is rising
construction costs from labor shortages, materials, and the
availability of land.
So, over the last 7 years, the construction workforce in
Atlanta has lost 6 percent of workers age 25 to 52 years old,
and, each year, we see a shortage of over 700,000 new
construction workers.
So, Professor Hamilton, help us out here. You have such
knowledge. How are these market conditions affecting first-time
home buyers, especially young families and communities of
color, in cities like Atlanta?
Mr. Hamilton. Thank you, Congressman.
The number one ingredient to purchase a home is capital. If
there is a shortage of workers, the number one ingredient to
attract more workers is wages. So we have a problem of
asymmetries in both power and capital. That is what we need at
a high level. We need a redirection of public investments to
redress that asymmetry.
We need to be able to offer residents of Atlanta a capital
foundation if they want to get--in order to get into a home,
which, as you eloquently pointed out, provides a great deal of
other amenities beyond the living in the home itself. It
becomes a capital foundation for economic agency.
Mr. Scott. Okay.
I have a minute and a half. What steps can we take in this
committee, in Congress, to address these labor shortages? Have
you talked with our unions and the residential construction
industry, which is expected to get worse with the aging
workforce?
Mr. Hamilton. As it relates to the labor market, there are
a variety of things that one could do.
The first thing I would say is, facilitate the economic
right to collectively bargain. Facilitate the capabilities of
workers to bargain in unity against some of the asymmetries,
again, with regards to power.
There are other mechanisms as well. We can instill a
minimum wage. We see the evidence that--you know, the rhetoric
is that a minimum wage will lead to job loss. Well, we have had
countless studies that have shown that there is plenty of slack
by which we can raise the floor on wages for Americans to
ensure that they get decent pay.
Mr. Scott. Well, let us deal with things like zoning
reform. How important is that and local Federal coordination in
expanding this supply of housing?
Mr. Hamilton. Well, it is----
Mr. Scott. Atlanta is one of the fastest-growing, most
dynamic areas we got but this is our number one issue right
now. We are either going to survive and swim or we could drown.
Mr. Hamilton. Yes. Yes. Really quick, smart zoning is
important and useful, but----
Chairman Hill. The gentleman's time has expired.
Mr. Hamilton [continuing]. trying to make sure that those
residents----
Chairman Hill. The gentleman's time has expired.
Mr. Scott. Thank you, Mr. Chairman.
Chairman Hill. Thank you very much.
The chair recognizes the vice chairman of the full
committee, the gentleman from Michigan, Mr. Huizenga.
You are recognized for 5 minutes.
Mr. Huizenga. Thank you, Mr. Chairman.
Zoning is a big issue.
Dr. Hamilton, we have not had a chance to meet, but, Mr.
Brooks, Mr. O'Leary, Mr. Moore, good to see you all again.
Location, location, location--watchword in real estate.
Well, it is also supply, supply, supply and demand, demand,
demand. All right?
My own family has been experienced in housing for over
three generations. We have been in the aggregate business. We
have been in the--for three generations. Two generations have
been in the ready-mix concrete and housing development
business. Personally, I was a realtor after I graduated with my
oh-so-employable political science degree. My brother is
currently a realtor.
We have seen barrier after barrier after barrier be put up
by every level of government, including with zoning, at the
local level, the State level, and, yes, the Federal level.
Mr. Brooks, you hit the nail on the head with your
discussion about why local banks and regional banks are no
longer holding mortgages because of a disincentive under Dodd-
Frank. It has radically changed how the banking business
relates to the real estate and to the housing industry.
In fact, I most recently just did a 24-unit condominium
project that we started just before the coronavirus disease
(COVID) and finished, mercifully, after COVID. I can tell you
that, when we went to the bank that we have done business with
as a family for three generations, they would not lend the
money to do the real estate development.
Why? Were we a bad credit risk? Did we not have enough cash
in the bank as family businesses? Three or four family
businesses all bank there. No, it was not--had anything to do
with that. It was, the regulators thought they were
overweighted in real estate. Therefore, we had to go find
another bank.
We did. We successfully found another local bank and oh, by
the way, three acquisitions later, we were back with the
original bank that had denied us the ability to get the loan to
do the development.
It is just--it is fascinating to me that people are not
seeing it for all what it is about, which is really, truly
supply and that demand, and we have supply not matching demand
right now.
Mr. Moore, yesterday, the House, we overwhelmingly--and
congratulations, both sides of the aisle, for this--we passed
the bipartisan Housing for the 21st Century Act. The Federal
Reserve is set to have a new Chairman. Just talk to me briefly,
very briefly, how you believe lowering rates in the future can
make housing more affordable for low-income and middle-class
families.
Mr. Moore. I am sorry, which----
Mr. Huizenga. The lowering--your microphone, please. The
lowering of interest rates, how is that going to benefit those
lower-and middle-income families?
Mr. Moore. Well, one of the things I wanted to say
regarding this is that--you mentioned zoning. The city in the
United States--there is one major city in the United States
that virtually has no zoning, and that is Houston and if you
look at my testimony, guess what? That has some of the lowest-
cost housing.
So there is no question that you are exactly right, that
zoning has really dramatically restricted the supply--you are
so right, Congressman. It is all about the law of supply and
demand. When you have zoning restrictions that dramatically
reduce the availability of multifamily homes, you are going to
see the prices of homes rise, and it is going to be harder for
people like my kids to buy a house.
Mr. Huizenga. Yes. Mine, too, by the way. They are worried
about that, and interest rates certainly are a part of that
affordability.
Mr. O'Leary, you have been very successful both off TV and
on TV with your businesses. As a job creator, what happens when
government reduces outdated government impediments, including
overburdensome regulations.
Likewise, what does it mean, as a job creator, when your
taxes are lowered, and for the taxes of maybe the customers as
well, like we did in the Tax Cuts and Jobs Act and more
recently in the Working Families Tax Cuts? How does that
benefit you and the economy?
Mr. O'Leary. Well, I liked your analogy on real estate when
you opened your statement; it is location, location, location.
Let me add something to that now that we face: power, power,
power. We do not have any.
The Chinese built 511 gigs last year, 110 of it solar, the
rest coal-burning plants that make electricity, 250 megawatts
at a time. They are killing us. They have no regulations. The
big guy says, ``Put one there, or you disappear in 18 months.''
Mr. Huizenga. So we need customers--you need customers----
Mr. O'Leary. I was saying--I am trying to answer it,
saying, you want--I want----
Chairman Hill. The gentleman's time has expired.
Mr. O'Leary.--deregulation on power so I can create jobs.
Chairman Hill. The gentleman's time has expired.
Mr. O'Leary. If I can get power, I could create data
centers. I cannot do it----
Chairman Hill. Mr. O'Leary, thank you. Let us continue--
that power comment is important. Let us put it in the record.
Chairman Hill. The chair recognizes the gentleman from
Texas, Mr. Green, who is the ranking member of our Oversight
and Investigations Subcommittee.
Mr. Green. Thank you, Mr. Chairman. I thank the ranking
member as well, and I appreciate greatly the testimony of the
witnesses.
Mr. Chairman, I concur with what you said about persons
being priced out of the American Dream. I would add this: There
are people who are not only priced out of the American Dream
for all of the reasons that have been called to our attention
here today, but they are also priced out for another reason,
and that reason is invidious discrimination, very well known as
``racism.''
This occurs when some persons of color are in financial
institutions seeking a loan and they find themselves being
given a loan, if they receive it, that will have terms that are
less favorable, that will cost more, and they will be less
favorable and cost more than persons who are less qualified
than they are but of a different hue.
This invidious discrimination is something that I contend
can be dealt with and I will deal with that in just a moment
but for now, I would just like to call to your attention, Mr.
Hamilton, that this appears to be the case. Do you concur with
my premise?
Mr. Hamilton. We need an honest reckoning with our history
and recognize what you said as true and validated with lots of
evidence.
Mr. Green. Thank you.
One of the ways that we can acquire the intelligence
necessary to prove the allegations that I have made--the
empirical evidence is needed, and to acquire this empirical
evidence, there is a process called ``matched pair testing.''
This is where you take persons who have similar qualifications
and you send them out into a lending institution--similar
qualifications, but of different hues--and you then can acquire
results that will give you the empirical evidence to
substantiate what I have said.
In fact, we have had this done, and we have acquired some
of this empirical evidence, but it was a while ago. We need to
do more of it.
This is a problem that has a solution if we would but only
embrace it. The way is here for us. The question is, do we have
the will.
Quite candidly, I live today to live to see the day that we
will have a hearing comparable to this to talk about invidious
discrimination in lending and also the invidious discrimination
associated with purchasing a home if you are a person of color.
These things can be dealt with if we choose to, but we have to
have the will to do it.
Now, to be more specific in terms of a possible solution to
this problem that has been plaguing us since the arrival of
persons of color here on August 20 of 1619, here is a possible
solution that actually passed the House of Representatives: It
is called the Fair Lending for All Act. Under the leadership of
Hon. Maxine Waters, we were able to pass this legislation, Fair
Lending for All.
This bill would create the Office of Fair Lending Testing
in the Consumer Financial Protection Bureau that is under
assault currently. It would be charged with testing creditors'
compliance with the Equal Credit Opportunity Act (ECOA).
The bill would also create criminal penalties under Federal
law for knowing and willful discrimination by lenders when a
person is applying for credit. It does not matter what color
you are; if you are discriminated against because of your
color, you ought to pay a penalty.
Currently, persons who defraud the bank will suffer a
penalty if found guilty. That penalty can be a million dollars
in fines, and you can be imprisoned for up to 30 years. Well,
no such thing exists if the bank somehow defrauds you with
invidious discrimination.
This bill would have, if passed, afforded persons who are
found to have been discriminated against a penalty against the
lender in the amount of up to $50,000 and imprisonment for up
to a year--hardly the same as what happens if you defraud the
bank, but at least it would give us something that would act as
a deterrent.
I do believe that, if we had the will, we could eliminate
much of what we call invidious discrimination, but we just do
not have the will. We deal with all of the other problems, and
people of color have to suffer them, but they also suffer from
invidious discrimination in this, the great country that we all
know and love.
My hope is that one day, H.R. 166 was the number for it
last time--it will pass the House, the Senate, and be signed by
a President who understands that invidious----
Chairman Hill. The gentleman's----
Mr. Green [continuing]. discrimination still exists.
Chairman Hill. The gentleman's time has expired.
Mr. Green. Thank you, Mr. Chairman.
Chairman Hill. The gentleman from Kentucky is recognized,
Mr. Barr, who chairs our Financial Institutions Subcommittee.
You are recognized for 5 minutes.
Mr. Barr. Thank you, Mr. Chairman.
Mr. Brooks, welcome back to the committee. I think the
testimony that you offered about the nexus between Federal bank
policy, over-regulation of the banking sector, and affordable
housing is very timely.
As you know, Chairman Hill and I introduced the Main Street
Act to right-size regulation so that especially our community
banks can focus on the housing market and help Americans
achieve the goal of home ownership.
Your point, that non-banks currently originate the large
majority of all mortgages, while banks originate the remainder,
and most of those loans wind up on government-related balance
sheets with only about 10 percent of mortgage credit risk borne
by the private sector, I think, is a very important point.
You highlight two causes, first, Dodd-Frank's
disincentivizing mortgage lending and then, second, bank
supervision, leading banks to be wary of lending to apartment
owners and developers and the negative signal that sends.
How might the Main Street Act that we have proposed help
solve these problems and enhance community banks, in
particular--their ability to help Americans achieve the
American Dream of home ownership?
Mr. Brooks. Well, Mr. Barr, thank you for the question. It
is great to see you again and thanks for your leadership on
that bill in particular. It is a great idea--I would argue, the
most important idea of the package that the committee is
looking at.
I say that because community banks are so much better
credit managers of these kinds of loans than Fannie Mae and
Freddie Mac, and why? Because they live in the local community,
where they know the asset, they know the borrower, they know
the history of the asset.
I think about Mr. Huizenga's story about his small
apartment building in Michigan, right, where the local bank
that knew him well was not allowed to invest in that loan, and
instead it got shipped off to some bank someplace else that
would not know it as well.
So, first of all, an enormous amount of deployable capital
sits in banks below $10 billion, which is what you are focusing
on----
Mr. Barr. Yes.
Mr. Brooks [continuing]. in this Main Street Act----
Mr. Barr. And nothing wrong with non-bank mortgage
originators, but more competition, the better. Competition in--
--
Mr. Brooks. Hundred percent.
Mr. Barr [continuing]. credit markets lower costs----
Mr. Brooks. Hundred percent.
Mr. Barr [continuing]. obviously and do not forget the fact
that most of--up to 60 percent of all of the one-to four-family
residential construction and land development loans are
community-bank-held, and so another reason to promote
regulatory tailoring for these community banks.
Mr. O'Leary, I want to pick up where you left off, on
affordable energy and China and the investment that they are
making in reliable, affordable sources of energy, coal being
primary.
You know, because of the war on coal over the last 16 years
under the Obama and Biden Administrations, the United States
has prematurely retired 290 coal-fired power plants precisely
at the time when AI data-center energy demand is skyrocketing.
We have taken offline over 120 gigawatts of power over the last
decade or so.
Coal's share of total electricity generation in the United
States has plummeted from 44 percent of total U.S. electricity
in 2009 to only 15 percent in 2024. It is no surprise that
there has been a dramatic spike in electricity rates. In
Kentucky alone, utility rates have increased 59 percent over
the past 16 years.
So what is the answer? You said, in China they say, ``Build
it in 18 months, or you will disappear.'' How do we bring more
coal generation back online to win the race for AI, which--
Jensen Huang says we are only nanoseconds ahead of China.
Mr. O'Leary. Path to permit. I am a real estate developer.
I also develop data centers. We need a path to permit in less
than 7 months.
So--there is plenty of stranded nat gas all over the
country. So my job now is to go from State to State to find
2,000 acres with water, with stranded nat gas at sub-6-cents-a-
kilowatt-hour, and then I sit with leadership and say, ``Can
you get me a permit to begin construction in 7 months?''
Because I have to go--just to start the power, the 1.4 gig,
to make a 1-gig facility, of which the demand in the U.S. is 45
gigs--only five under construction right now. I am one of maybe
10 teams that can do this. If we do not have a permit in 7
months, we cannot go to the debt markets. We need $2 billion to
start.
Mr. Barr. Well, I have talked to Secretary Lutnick about
how we can encourage more construction and----
Mr. O'Leary. Just give me permits.
Mr. Barr [continuing]. pull power. I would love to talk to
you about that.
Final question to Mr. Moore.
In his testimony, Professor Hamilton said, ``We need an
economic paradigm that rejects private interests under the
banner of modern supply side economics.''
Can you speak to how unleashing the supply side of the
economy through lower taxes, less regulation, more energy
production, more supply of capital, lowers prices?
Chairman Hill. He can, but he will have to do that in
writing.
Mr. Barr. Supply, supply, supply. That is how you lower
prices. It is not that hard.
Chairman Hill. The gentleman's time has expired.
Mr. Barr. I yield back.
Chairman Hill. The chair recognizes the gentleman from
Missouri, Mr. Cleaver, who is the ranking member of our Housing
and Insurance Subcommittee.
Mr. Cleaver. Well, thank you, Mr. Chairman.
Mr. O'Leary, you and Mr. Moore both suggested that State
and local barriers to affordable housing was due to a lack of
building code inspectors and a variety of zoning matters. Are
you suggesting that we should not have zoning in major cities?
Mr. O'Leary. No----
Mr. Moore. No--was that for me or you?
Mr. Cleaver. Either one of you or both.
Mr. Moore. You go ahead.
Mr. O'Leary. No.
It is a very simple equation, actually. If you are agnostic
to politics, you go to the path of least resistance with
capital.
So, if you want to invest a billion dollars in housing, you
find a place, as Mr. Moore suggested, like Houston, where the
path of least resistance is obvious. That is why they are
getting the houses, because I can go put capital to work there,
I can do it quickly, path to permit is a lot sooner.
I am not suggesting it is the Wild West, no permitting but
if you go and compare that to Los Angeles, it is not
investable. You cannot invest in Los Angeles, and I have said
this countless times. I am not against the people of Los
Angeles, but you cannot raise capital there because of this
issue.
So path to permit in housing will increase supply, reduce
costs--and I talked about input costs on softwood lumber and
things like that, but it is really a supply chain problem. Just
give more land, reduce the friction on permits, and watch the
magic happen. Watch the money flow there.
Fifty-two cents of every dollar invested on Earth comes to
the United States. It wants to invest here.
Mr. Cleaver. All right.
Mr. O'Leary. It is still 52 cents on every dollar--the
number one economy on Earth. You cannot get a permit anywhere,
basically.
Mr. Cleaver. Yes.
There is this subtle suggestion in here that due to a lack
of building code inspectors things are not done. As a former
mayor in Kansas City, that is fine and easy for somebody who is
not in that mayor's office because that is an unfunded mandate,
if the government said, ``You do this zoning, and you do
that,'' and it disrupts the municipal budgets.
I want to--just a quick question before I go to my next
question, and that is: Are all of you in support of consumer
protection?
Mr. Moore. I am.
Mr. Brooks. I mean, as a former regulator, I will just say,
of course I am in favor of consumer protection. There is an
issue of how many agencies should have the overlapping
responsibility for consumer protection----
Mr. Cleaver. Uh-huh.
Mr. Brooks [continuing]. and what do you mean by ``consumer
protection.''
Mr. Cleaver. Well, I am kind of asking the questions, but
the issue is how you look at it, because I do not understand
all of the hostility toward a consumer protection agency. I
mean, it is just mind-boggling that----
Mr. O'Leary. I do not think you are getting any friction
there. The point is, how fast can you do that work? I think
every consumer should be protected, but not if it takes 2 years
to determine whether they are protected or not. That just
becomes a huge friction point, and the market cannot--cannot
work.
We have put so much regulation at so many levels, whether
it is----
Mr. Cleaver. Yes.
Mr. O'Leary.--at the city level, the State level, or the
Federal level, that the markets stop working.
Mr. Cleaver. Yes, but those human beings' lives stop
working when they are----
Mr. O'Leary. Well if you want lower housing, you have got
to fix this.
Mr. Cleaver. When they are taken advantage of it might take
2 years to get it straight.
I mean, I do not--it is just hard to--for me to figure out.
I want to go over to some serious problems we are having
that I hope we--we cannot solve this morning but we can
probably solve tomorrow if you stop by--and that is: If the
United States of America is going to become what I think the
Founders wanted and what many of us want, why do we keep--I
mean, why do we have to--even in testimony, we put ``blue
city'' and ``red city'' and ``green city'' and ``yellow
cities'' and whatever. I mean, why is that going on? I mean,
why would you have to do that?
Chairman Hill. I would like to ask you to respond in
writing to the gentleman's question. Time has expired.
Chairman Hill. The chair recognizes the gentleman from
Texas, Mr. Williams, who is the chairman of our House Small
Business Committee.
Mr. Williams, you are recognized for 5 minutes.
Mr. Williams of Texas. Thank you, Mr. Chairman, and thank
all of you for being here today. It is good to see so many of
our friends.
The rising cost of housing is hurting American families--we
have talked about that all day today--and Main Street
businesses too. When housing becomes too expensive, fewer homes
get built. That slowdown in construction limits community
growth, which, in turn, puts pressure on local small
businesses.
Small businesses are the backbone of their communities. We
have talked about that. Almost 99 percent of them are small but
when neighborhoods stagnate and entrepreneurs lose
opportunities to grow and expand, that is a problem.
From small builders and carpenters to plumbers and welders,
housing affordability and small businesses are closely
connected, and when one struggles, the other often struggles as
well.
Mr. Brooks, first, can you expand on how the rise in
housing costs affects small businesses, Main Street America?
Mr. Brooks. Well, as several witnesses have already said,
Congressman, the foundation of most households' wealth is their
equity in their house. So the ability of a household to spend,
the ability of a household to sell the house and move for a
better labor opportunity, it is all really tied up in the
robustness of the housing market.
As I said, the robustness of the housing market has two
aspects to it: there is the price of the house and your ability
to sell it. So we saw in the financial crisis that labor
mobility went to zero because no one had equity and they could
not sell their houses. The second piece is the price of credit,
which is how much does it costs me every month to pay my
mortgage and stay in that house.
Both of those things are inflated right now, which
contravenes what you learned in economics class in high school.
Usually, if the cost of money is high, then the cost of the
underlying asset is low. Right now, we have a strange
stagflation in the housing market.
Something has to be done about it. This is the Committee on
Financial Services, and so you have jurisdiction to oversee the
credit allocation in this country.
I would argue that the regulation of our banking sector,
the reduction in competition in lending to Main Street, right,
where people can use home equity to fund businesses or sell
houses to move for better jobs--that system is broken. It used
to work well. It stopped working after the crisis.
Mr. Williams of Texas. You are exactly right.
One thing--I mean, full disclosure, I am a car dealer and
so, when we start talking about access to capital, you are
talking to me.
It is essential to building a successful small business, in
addition to--one of the most common challenges they raise--
small businesses--are the one-size-fits-all regulatory burdens
that limit how small businesses can use their capital, and they
must decide between regulatory compliance or expanding their
business. It is like the banks who are hiring compliance
officers, not loan officers; that affects Main Street America
also.
So to give small business a real chance to succeed, we need
to reduce unnecessary red tape--we have talked about that--and
remove the barriers that prevent entrepreneurs from securing
the capital they need and, frankly, competing so the consumer
is the beneficiary.
So, Mr. O'Leary, you invest in small businesses, and we
certainly know you do a great job, from a wide variety of
industries. What are you seeing as some of, not the biggest
hurdles, but the biggest regulatory hurdles to the success of
Main Street?
Mr. O'Leary. Across all 11 sectors, it is finance and
receivables for small businesses. It has become a huge problem.
When interest rates were really, really low, the hard
money, as it is called, was available at 15 to 17 percent. That
is a lot, but it was used quite a bit. My companies used it.
We are way over that now. I have seen 27 percent offers for
financing receivables, because they cannot go to a regional
bank and get any financing and these are good companies that
are actually recurring invoices to Walmart, to Target--I
mentioned those two companies--and many others. Amazon, as
well, is 40 percent of volume now for consumer goods.
This is a--if we just solved this, if we made credit
available at sub-10 percent for these companies, just like the
big guys have--they are right now paying 7, 7\1/2\--if we did
that for small business, you would see an explosion of growth
in America--millions of businesses, millions. We are talking
about millions and millions of businesses that do not get 7
percent credit for their receivables. This is stuff they sold,
and it sold through. It is proven. It is a good asset; cannot
finance it.
This is a big problem. This act helps a bit with the red
tape on it, but they are still not getting anywhere near what
the big guys get; they are not getting 7 percent.
Mr. Williams of Texas. They would make more profit and pay
more taxes if the interest rate was lower.
Mr. O'Leary. And more jobs.
Mr. Williams of Texas. There you go.
Mr. O'Leary. Way more jobs.
Mr. Williams of Texas. So, Mr. Brooks, let me shorten my
question, as we end it down here.
What are the consequences for borrowers in local economies
when community banks, which bank people like me, are forced to
pull back in lending due to regulatory capital--and we just
talked about that--pressures?
Mr. Brooks. Well, Congressman, one of the things that
happens is foregone consumption, because most people do not
have access to Goldman Sachs. So, if First National Bank of my
hometown in Colorado is not going to make the loan, the loan is
not going to get made, is the bottom line.
Most capital formation happens locally, and if community
banks are not unleashed to supply that demand, you are mostly
out of luck.
Mr. Williams of Texas. Well, we talked about inventory, and
flooring inventory is getting harder and harder and when you
have less inventory, you have less opportunity to sell. It
trickles down.
I want to thank all of you for being here today.
I yield my time back.
Chairman Hill. The gentleman yields back.
The chair recognizes the gentleman from Illinois, Dr.
Foster, who is the ranking member of our Subcommittee on
Financial Institutions.
Mr. Foster. So, Mr. O'Leary, here is the pitch: Imagine it
is 1975. Two brothers, a 19-year-old and his 17-year-old little
brother, and a couple of their friends have the bright idea to
start a new business, all right? They want to use the newly
invented microprocessor to control theater stage lighting.
Never been done before but they have a problem. To build their
prototype, they need $500 from their parents.
So my question is, do you give them the $500? If so, what
do you predict for the future of their business?
Mr. O'Leary. You know, that is--I love that question
because my son just pitched me for a lot more than that on his
deal.
Mr. Foster. Well, this was $500 in 1975, which was real
money back then.
Mr. O'Leary. Oh, that is a lot.
Mr. Foster. Yes.
Mr. O'Leary. You know, I think it is--I would have done
that, I would have lent it, because the outcome is unknown but
there is a wonderful thing that happens when a young person
takes on the responsibility of another person's money. It
creates a fantastic platform by which they understand they
serve someone in perpetuity.
Mr. Foster. Yes. Well, so I was that older brother, and----
Mr. O'Leary. What happened?
Mr. Foster. What happened is, that company--it is 51 years
ago now, and that company, it is about $450 million a year,
1,600 employees----
Mr. O'Leary. Well, I rest my case, Your Honor.
Mr. Foster [continuing]. that manufactures in the Midwest,
all right? And, as of the beginning of last year, it has just
completed the Employee Stock Ownership Plan (ESOP) transition.
So that company that we started with 500 bucks 51 years ago is
now 100-percent owned by the 1,600 employees who built the
company.
Mr. O'Leary. Well, you deserve the American Dream Award for
that.
Mr. Foster. Yes. Well, it is--I am, I guess, proud of that.
I had my partners buy me out when I entered Congress,
because I did not want to be casting votes that affected my net
worth, which may sound sort of quaint these days, but, anyway,
that is what I did.
Anyway, the--and both sides here have emphasized the role
of local community banks in housing and in business growth.
Now, during the government shutdown last October, the
Federal Reserve had two really excellent conferences--one on
community banking, the other one on the future of payments.
Since we had decided to cancel hearings, I attended both full-
day conferences and what we heard uniformly from all the
community bankers who showed up mentioned that their number one
concern was what they viewed as the mortal threat from
interest-bearing stablecoins, either by directly paying
interest or indirectly through various payments from the crypto
exchanges that was allowed by the GENIUS Act.
They had a fear that interest-bearing stablecoins would
just drain the deposits from small community banks and take
away one of the only sources of capital that small communities
have, rural communities.
So I was wondering, the whole panel here, where would you
land on that? I mean, we have a decision to make. Should we
side with the community banks on this, or should we side with
the----
Mr. O'Leary. I would love to opine on that for a short
period.
Mr. Foster. Sure.
Mr. O'Leary. The opportunity is for the community banks--
and all money center banks included--to allow small businesses
to open a stablecoin account beside their fiat currency
account. There is absolutely no reason they cannot do that.
If I were a small community bank, I would try and keep
competition at bay, but you cannot. We have passed the law. It
is legal tender. A stablecoin, backed by 92 days less duration
of a Treasury bill, is now a legal tender for anybody that
wants it.
The banks are holding back by not allowing accounts to show
up and every one of my companies is using these now to settle
payments or take in payments. It is a huge inconvenience. You
are forcing them to open accounts at Robinhood and Coinbase,
when they would just rather work with their regional bank if
they could.
I am not against Robinhood or Coinbase; they are innovators
but a small business doing $5 million in sales that can avoid
2\1/2\ percent on a credit card payment by using a stablecoin,
let them do it. Like----
Mr. Foster. Well, I think the competition there, frankly,
it is India. If you are in India and you want to give a pauper
three rupees, you both get out your cell phones, authenticate
to your bank accounts, transfer three rupees, zero fees. It has
nothing to do with blockchain or anything else.
Now, I guess, we have also hit on this issue of financing
receivables. There is a big--the current issue there is a lot
of the First Brand fraud and similar things, with double
pledging of a collateral, is a huge problem. Those of you who
follow ``Money Stuff,'' this very amusing blog has written a
lot about that.
Now, the Depository Trust & Clearing Corporation (DTCC) is
doing a very interesting prototype that uses blockchain and
tokenization to prevent double pledging of receivables and
other assets. I was wondering if you can--you know, would that
actually be a significant positive use of blockchain here?
Mr. O'Leary. Yes, I think people should stop thinking about
blockchain as crypto. It is really just software. It is
contract management. That is what it is, and I think it has
been misnamed. In fact, if you take out the speculation of
Bitcoin and all the other coins and forget about that for a
second, blockchain technology----
Chairman Hill. The gentleman's time has expired.
Mr. O'Leary, if you would finish that thought in writing to
Dr. Foster.
Chairman Hill. The gentleman from Georgia, the vice
chairman of our Financial Institutions Subcommittee, Mr.
Loudermilk, you are recognized for 5 minutes.
Mr. Loudermilk. Well, thank you, Mr. Chairman.
Thank all of you for being here today.
I go back to when I first ran for Congress in 2014. As a
small-business owner, I wanted to engage with businesses of all
sizes in my district, so I spent many, many hours meeting with
various businesses. I asked them, ``What is the key? What is it
that I can do in Congress to help you expand, help your
business to be profitable?'' We all know, if a business is
profitable, then the community is profitable. I cannot recall
anyone saying anything differently--is that the common answer
was, ``The greatest cost to our business is government
regulation,'' to a T.
I even asked a group of executives, I said, ``Which would
be more important to you, for us to lower taxes or cut
regulation?'' You know what they all said? ``Cut regulation.
Taxes are important, but regulation is the greatest drain on
our profitability.''
With housing in mind, I started doing some research, and I
came across a study--and this was in 2014--that, in some
markets, over 50 percent of the cost of a new home is related
to government regulation and I started thinking about that. You
could cut the cost of a new home significantly just by reducing
the regulation.
As we look further, there is a lot of regulation that is
not even applicable to the business that is having to live by
that regulation.
If you want to look at the high cost, we need to look at
the regulation side, and I think that is what we are really
focused on this side of the dais here, is how can we do that.
Mr. Brooks, you mentioned in your testimony that most
Americans know that everything got more expensive over the past
5 years as the country experienced this incredible inflation,
the highest since the 1970s, but a lot of people do not know
that housing inflation was dramatically worse.
Can you talk about why we saw that spike in housing
inflation?
Mr. Brooks. Yes. So, Mr. Loudermilk, one of the worst parts
of that problem is the 5-million-unit housing deficit is not
new. The 5-million-unit housing deficit goes back basically to
the immediate post-financial-crisis era, and nobody has built a
house since, is almost what it feels like. Okay, and that was
the point where two things happened at the same time.
So one is, we had bad credit management, which meant many
people had negative equity in their houses and could not move
for work and could not sell their houses.
The other is, we overcorrected on the credit side. I would
argue that a corrective was needed; we needed something like
Dodd-Frank but with 15 years of experience of that kind of
regulatory environment, banks cannot do business.
We could talk about it in the housing context like we have
already done, but Mr. O'Leary has mentioned factoring and
inventory finance for a while. The Federal bank regulators have
more or less prohibited factoring as a business line for banks.
Venture debt does not exist in the United States after Silicon
Valley Bank failed.
These are all overcorrections where there is a strong
demand for a product, and when you drive the regulated
institutions out, what you are left with is the hard-money
lenders and the scary guys nobody wants to talk about. That has
to be fixed.
Mr. Loudermilk. Well, we are addicted--this institution is
sort of like, when somebody has a headache, they go to the
doctor, they give them an aspirin, and they never look at the
real root of the problem. Our aspirin is money. Just throw
money at something and hope it goes away, but it inevitably
gets worse.
Would additional government spending, instead of meaningful
regulation relief and market-driven reforms, make housing
availability and affordability--would those problems get worse
or better?
Mr. Brooks. Let me just say, the more regulation that has
come into the housing markets, the more--it is like you squeeze
a balloon. So you think you are solving one problem, and it
pops up someplace else. As government gets involved in credit
allocation, what winds up happening is, market discipline goes
away.
So think about Fannie Mae and Freddie Mac were doing in the
1990s: They were inflating markets in areas and creating loans
for people who could not afford the loans, leading to a very
predictable foreclosure crisis.
That is what happens when government, rather than private-
sector actors, start managing credit, is they allocate the
credit to their friends. This side has their friends; that side
has their friends but squeezing the balloon is never a good
idea.
The good idea is, let the shareholders bear the risk. Let
the private sector get back involved here. You know, private-
sector banks can manage credit just as well and fail; if they
fail, just as well as a car dealership can, just as well as
anything else can but when government is too involved, bad
things happen.
Mr. Loudermilk. Real quickly--I am running out of time.
How--I have a bill called the Taking Account of Institutions
with Low Operation Risk (TAILOR) Act, which would cause
government agencies to tailor their regulations based on the
risk of the business, the size of the business, the scope of
the business, instead of just blanket regulations. How
important is that?
Mr. Brooks. Critical. Compliance for compliance's sake is a
waste of time. You have compliance because there is a risk. So
say what it is and control that risk.
Mr. Loudermilk. With that, Mr. Chairman, I am out.
Chairman Hill. The gentleman yields back.
The chair recognizes the gentlewoman from Ohio, Mrs.
Beatty, who is our ranking member on our National Security
Subcommittee.
Mrs. Beatty. Thank you, Mr. Chairman.
Thank you, Ranking Member Waters and to all our witnesses
today, thank you for being here.
On the record and off the record, let me say, I am a big
fan of ``Shark Tank,'' and ``Mr. Mean,'' I am trying to decide
if you are that on TV or here but thank you for your remarks on
tariffs that we are doing.
To my good friend Dr. Darrick Hamilton, good to see you
again. You have been here and testified before us and also at
many academic forums on the economy and on housing, and some
things have not changed.
Let me start with this, because I have been a longtime
advocate for community development financial institutions, or
our CDFIs. Our ranking member opened up the dialog early,
talking about the importance and value of CDIs and so, in this
committee, I like the theme when we are talking about ``priced
out of the American Dream.'' It reminds me of, the American
Dream for most folks is owning a home.
Do you remember your first home, to the witnesses, yes or
no.
Mr. Brooks. Absolutely.
Mr. O'Leary. Yes. I do. I do.
Mr. Moore. Yes.
Mr. Hamilton. I am still in that first home.
Mrs. Beatty. Okay, there you go. There you go.
So, right now, when I think of that American Dream, I think
about home ownership. I think about whatever your financial
goal was to reach it but then I think about our economic
challenges. I think about Trump's tariffs and what it is doing
to those individuals and the economy and small and large
businesses.
When I think of ``dream''--and we are here in the middle of
February, and it is Black History Month--Mr. Chairman, I would
like to enter into the record this article from Darrick
Hamilton in 2021, when he talked about the difference between
haves and have-nots, and he said these words, quoting from the
lessons of Dr. Martin Luther King:
``Now is always the time to build on the lessons of Dr.
King and shift our prevailing paradigm toward a more inclusive
and self-prosperous future, with the strategic direction of our
public resources toward people and a sustainable environment in
both an industrial and economic sense. In the end, the
optimistic message is in the power that lies within us as we
dream the American Dream in our economy.''
Well, here we are----
Chairman Hill. Without objection, that will be included in
the record.
[The information referred to can be found in the appendix
on page 90.]
Mrs. Beatty. Thank you.
Here we are, some 5 years later.
I could have also, Dr. Hamilton, gone back and quoted you
15 or 20 years ago. I could have quoted when you were at where
I left, The Ohio State, to come here, and you ran our current
institute, doing some of the most prolific research that I have
ever read on economic development, our country, our people, and
our economy.
So, last week, I asked Secretary Bessent for an explanation
to when the appropriations for Fiscal Year 2025 funds would be
disbursed to the CDFIs. I could not get a straight answer--no,
I did get an answer. He said he chose not to answer it, because
he did not have the answer, in my opinion.
Aside from him putting the blame on the Office of
Management and Budget for failing to appropriate the funds, I
know that, for CFDIs, predictability in funding cycles is
essential to plan long-term community investments and maintain
the momentum in our neighborhoods, the neighborhoods that they
serve.
Can you discuss the risk associated with these extended
funding delays on what is going to happen in our communities
with CDFIs with the Treasury dragging their feet?
Mr. Hamilton. Markets are local; markets are relational. So
not funding those entities is highly problematic and will be
detrimental to our economy.
If I may address a point that was raised previously----
Mrs. Beatty. Yes.
Mr. Hamilton [continuing]. about whether I am anti-supply,
I am not anti-supply. I believe in the American people. I
believe that people go beyond just being labor inputs and
beyond just being consumption agents; that they are the
innovators; that when CDFIs are able to invest in people, when
government is able to invest in people, not only is it
beneficial for them but they produce, they come up with new----
Chairman Hill. The gentlewoman's time has expired.
Mrs. Beatty. Thank you. I yield back.
Chairman Hill. Thank you.
The chair recognizes another distinguished member from
Ohio--Mr. Davidson, you are recognized.
Mr. Davidson is the chair of our National Security
Subcommittee.
Mr. Davidson. Thank you, Chairman.
Thanks to our witnesses. What a great panel. I really have
enjoyed the discussion.
When I go back--you know, frankly, Mr. Brooks, Mr. O'Leary,
Mr. Moore, you guys in particular--as we were watching this
inflation crisis unfold, we called it. This is not the result
of some phantom cause; like, how could we possibly know what
would cause inflation? We could see this train wreck coming,
because we saw massive spending, cash pouring into our economy.
As the fiscal spending was going, Congress just kept
cutting bigger and bigger checks. Meanwhile, you had executive
authority around the country--frankly, around the world--
artificially limiting supply. They were closing our entire
economy. So how did you not have too many dollars chasing too
few goods?
Under the Biden Administration, they came up with creative
names like the ``Inflation Reduction Act,'' you know, to spend
this money. I mean, when Lee Zeldin took over at the
Environmental Protection Agency (EPA), he cited the Biden
Administration's own words, that they were ``pushing gold bars
off the Titanic,'' shoving this cash out into the economy, to
do nothing productive. We look at auto-industry companies
writing off tens of billions of dollars in losses because there
was no consumer demand for this and this is what happens with
central planning. In essence, the central planning that we
have, sort of, all embraced is the Federal Reserve. They
arbitrarily set interest rates, and when they arbitrarily set
them too low, as was definitely happening during this period of
time, they cover for it by growing their balance sheet. In
fact, they grew their balance sheet to over $9 trillion.
So should the Federal Reserve continue to do this?
Mr. Moore, you have highlighted this.
Are the results predictable, or is it just, ``How could we
explain this?''
Mr. Brooks, as you have highlighted, a house is maybe the
most common asset people have. So, once you have inflated
something, of course housing prices are inflated, but so are
other asset prices.
Mr. Moore, could you talk about these implications?
Mr. Moore. Well, you did a nice summary, Congressman, of
what has happened over the last 5 years.
We spent $4 trillion to $5 trillion after COVID. By the
way, it was mostly the Build Back Better bill, the Inflation
Control Act, the quote, ``Infrastructure'' bill and that is--
look, you said it very well. Inflation is too many dollars
chasing too few goods. It is not complicated, right? It is too
many dollars chasing too few goods.
What did we do, where did the money come from to fund--and,
by the way, Trump, on his way out in his first term, passed a
trillion-dollar spending bill we did not need and so it was all
printed. We printed the money.
By the way, there were 30 economists in The New York Times,
including Nobel Prize winners, who said, ``Do not worry. All
this spending will not cause inflation.'' I mean, those
economists probably should send their Ph.D.s back and say, ``We
do not know what we are talking about.''
So we had the highest inflation in 30 years, and the point
I was trying to make to the committee is, we are paying a high
price for that even today. It is the reason, Mr. Chairman,
people are angry, because prices have stayed--and ground beef
and eggs and everything that they buy is more expensive. It
takes a long time to drain that out of the system.
Mr. Davidson. Thank you for that.
Mr. Moore. Hopefully, we learned the lesson that there is
no such thing as a free lunch, that these expenditures came at
a cost of much--everybody paying higher prices and much lower
growth.
The good news is we are now at a 4-to 5-percent growth path
within 1 year of this new administration. That is a pretty
remarkable achievement.
Mr. Davidson. It is sort of like Narcan for a fatal
overdose of government that was administered. We were trying to
revive it with the Big, Beautiful Bill, the Working Families
Tax Cut Act, and many pro-growth policies.
When I think about pro-growth policies, one of the big
ones, Mr. O'Leary, you highlighted. As a--I grew manufacturing
companies between the Army and coming to Congress. Capital is
really the lifeblood.
When you look at being able to get access to that, one of
the challenges has been still the Federal Reserve. They are
paying banks not to deploy capital. Interest on reserves is one
thing; they are paying interest on excess reserves.
So the banks are hiding their cash at the Fed, not putting
it at risk in the market. We know the banks are not meeting the
market demand because you have a massive growth in non-bank
lenders.
Again, Mr. Moore, could you highlight kind of the challenge
on interest on excess reserves? I think you have cited that it
is costing like $200 billion a year that could be in our
economy.
Mr. O'Leary. Yes.
What I like to solve this problem is always innovation and
competition. I mean, to me, if you just let the American
economy do its thing, as it is done for 200 years, it remains
number one on Earth through all kinds of change, but it is all
about innovation and competition.
So anything, in the banking system particularly, that
stifles innovation and competition is bad. We have some of that
happening----
Chairman Hill. The gentleman's time has expired.
Mr. Davidson. Unfortunately, my time has expired, and I
will send a few questions for the record.
Mr. Davidson. I yield back.
Chairman Hill. I thank the gentleman.
I now recognize the gentleman from California, the ranking
member of our Monetary Policy Task Force, Mr. Vargas.
You are recognized for 5 minutes.
Mr. Vargas. Thank you very much, Mr. Chairman, and I want
to thank the ranking member and, of course, the witnesses here
today. I think that the hearing today has been excellent, and I
appreciate it very much.
We did just get lectured on fiscal responsibility. I would
just like to remind my good friends on the other side, they
just passed their ``Big, Ugly Bill'' that added $5 trillion to
the deficit, with no benefit to it.
I think that, Mr. Brooks, you spoke the most truth today
when you said, that side has their friends, and this side has
our friends. I think that is--I think that is very true. I
think you said the quiet part out loud, and that is, they love
the wealthy and the big corporations, and we love the working
class and the poor. That is the truth, so I am glad you
mentioned that.
By the way, Mr. O'Leary, I do not watch the show much
because I do not like TV, but I always like watching you
because I think you are very clever when you banter back and
forth with your friends on the--and, today, when you were asked
a question about, ``Coal, coal, coal. Is not coal so great? We
need coal, right?'', you said, ``Yes, wherever there is gas
that is where I want to build, wherever there is gas and
land.'' Did not answer the coal question and I thought that was
great, and he felt like he got his answer and walked away, but
you did not answer the coal question.
Mr. O'Leary. Yes, I will answer it if you want. I do not
think I can get a permit for coal. So I am not stupid and I am
not going to waste my time trying until you tell me I can.
Mr. Vargas. Yes.
Mr. O'Leary. So I am a very simple person. How fast can I
get a permit?
Because what I can do is raise capital from all around the
world. If you go and try and raise $2 billion and you tell them
you are going to use coal right now, the cost of capital will
go up 300 basis points.
Mr. Vargas. I was going to get to that, because I think
that is one of the things that you said that is very, very
true. It is, actually, how quickly you can get a permit. That
is with housing, with anything else. You need certainty to be
able to finance it.
I was on the San Diego City Council for 8 years. I chaired
the Land Use and Housing Committee for some time on that
committee. Unless you could have a developer get certainty that
they could develop, it was very hard to carry that property. So
they needed certainty.
People that pushed back the most, actually, were the people
that lived in the community where the development was coming
near to or in, because of the issue of they did not want
crowding. They wanted to protect their investment. They wanted
density somewhere else, development somewhere else, not in
their neighborhood and that is a problem. I mean, that really
is a problem, the zoning issue, how quickly can you get the
opportunity to build. You need to have that opportunity so you
can finance that project.
Mr. O'Leary. I do not even break the ground until the
community is behind me. I do not even bother trying. You cannot
win that way.
Mr. Vargas. Exactly. That is what I am saying. Unless you
have the ability to do that with zoning, where you can do it by
right, and you can get to it quickly, you cannot finance it.
The bank will not finance it. You need that ability.
You have to convince your community that development is
necessary so your kids can live somewhere and that, in
California, means density. It is hard to convince people of
that.
Mr. O'Leary. I know how to do that.
Mr. Vargas. Yes, no, and I think some people do well. Most
people do not and that is why I think you need to have it by
right and not by the ability of someone to charm them, but
instead by--zoning does this, so you can, in fact--and in
California, thank God, they are trying to change this.
Because there are a number of things--for example, smaller
lot sizes. They do not need these gigantic lot sizes too.
Interestingly, at the turn of the last century, in 1900, a
single-family detached home was about 700 or 1,000 square feet.
Today, it is 2,400 and bigger. You do not need these large
homes. You can have smaller homes. You can do this and have a
very nice community.
Anyway, I was going to add those things.
The other thing I would like to say is that the interest
rate is a problem, but--I bought my house in 1979. I paid 7.2-
percent interest on the mortgage. I still live in the home, by
the way, and my parents bought their home in 1972. They paid 7
percent. Today, the interest rate for a single-family mortgaged
home is about 6.3 percent, 6.4. It is actually lower than when
I bought my home.
The problem is this, though: I bought my house for
$176,000. If you put it in an inflation calculator to try to
figure out what is the cumulative interest on--interest as well
as inflation, today, that should be about $390,000. It is not;
it is $2 million.
That is the problem. The actual cost of the home has risen
so dramatically that you cannot finance it anymore because it
is too damn expensive. That is why you have to have smaller
lots. That is why you have to have smaller homes. That is why
you have to have the ability to get those permits with some
certainty so you can finance the project in the first place.
That is why I think this was a very helpful meeting,
because I think you guys did speak of those things.
Again, I believe very much that there has been
discrimination, no doubt about that.
With that, my time is over, and I yield back. Thank you.
Mr. Huizenga [presiding.] The gentleman's time has expired.
The chair right now recognizes the gentleman from
Tennessee, Mr. Rose, who is recognized for 5 minutes.
Mr. Rose. Thank you, Chairman Huizenga.
I want to thank Chairman Hill and Ranking Member Waters for
holding this important hearing and thank you to all of our
witnesses for taking time from your schedules to be with us.
Mr. O'Leary, I appreciate your testimony emphasizing the
need of streamlining permitting and freeing up Federal land for
housing. I agree wholeheartedly.
However, in many communities, particularly our densest
urban areas, there simply is not undeveloped land left to be
built on. In these places, the solution must be building up,
not out. Yet restrictive zoning laws stand in the way.
For example, here in Washington, DC, perhaps the most
glaring example, the Height of Buildings Act of 1910 caps
building heights based on street width, with an absolute
maximum of 130 feet. This arbitrary limit, created over a
century ago, artificially constrains housing supply in one of
America's most expensive housing markets, where the median rent
exceeds $2,200 per month.
Do you believe that relaxing or eliminating Washington,
DC's maximum height restrictions would allow the private sector
to increase housing supply and reduce costs for working
families?
Mr. O'Leary. There is only one answer. It is, yes. We would
build up in 2 seconds if we could do that.
I mean, you need a combination of all of this.
The thing that I wanted to point out to everybody is, there
is a competition between States, and there is a competition
between nations. So, right now, if you are given $2 billion to
deploy, you have to find a State where you can get that money
to work and so you go for the path of least resistance.
The places that are obviously getting that capital now are
places like Tennessee, Texas, Florida, North/South Dakota,
because permitting has been relaxed there by the leadership, at
either the Governor's office or the mayor or the Senator or
whatever.
Imagine my challenge. I have to deploy capital. I have to
find a place to do it. The harder it gets, the less I want to
spend my time fighting that fight. I am just a guy trying to
put money to work. If you told me--if I was the first to know
that you would lift those height restrictions, how about $2
billion right now? Like, in 2 seconds. Because the demand for
housing is crazy in DC.
I mean, that is a good idea. Why do you not do that? That
is a fantastic idea. I 100 percent endorse that. You would get
a ton of capital.
Mr. Rose. Thank you. I appreciate that.
Mr. Moore, in your written testimony you warned that
Federal policies reducing downpayment requirements to 2 to 3
percent range, in some cases effectively to zero, were a major
driver of the 2008 housing and financial collapse, with default
losses concentrated in those low downpayment loans. At a time
when it is very tempting for policymakers to respond to the
housing affordability crisis by expanding lower and no
downpayment programs, can you elaborate on why you believe that
approach is so dangerous, and how we should weigh the short-
term appeal of expanding access against the long-term systemic
risks that you describe?
Mr. Moore. There is nobody that is more in favor of
increasing home ownership, and so, I am--that is one of the
reasons I wanted to testify here because I think it is a high
national priority. It is the American Dream.
The mistake we made for 2008 was that we kept subsidizing
so much of the downpayments that, thanks to programs like the
Federal Housing Administration (FHA) and Fannie Mae, you had
people paying 3 percent or less downpayment. In some cases, by
the way, the downpayments were zero. You could finance your
closing costs--and so essentially, what that meant is the
person who was moving in had no skin in the game, right?
Unfortunately, the lesson we learn--we should have learned from
2008 is that if you looked at the portfolio of loans that were
defaulted on, the single biggest determinant was how much
equity the person had in the home. In other words, if somebody
has equity in their house, they are not going to default on a
loan because they have got skin in the game.
So all I am saying, my advice to you as Members of Congress
is there are always ideas--oh, let us keep lowering
downpayments so people can afford to move in a home, but then
they cannot afford to make the payments and then everybody is
worse off. So please avoid that because the losses were
excruciating. It took 5 years for the U.S. economy to recover
from that mortgage meltdown that we had in 2008.
Mr. Rose. Thank you. I agree very much.
Mr. Brooks, we do not have many seconds left here, but what
can we do, what do you think Congress, policymakers here can do
to reverse the damage done by the Biden-era inflation? Is there
something we can do from a policy perspective?
Mr. Brooks. Well, you can start by fixing the regulatory
overhang. So somebody said earlier today you have got two
problems, inflation and taxes on one hand and regulation on the
other hand. Growth requires deregulation. We have to grow our
way out of this.
Mr. Rose. My time is expired. I yield back.
Mr. Huizenga. The gentleman's time has expired. The chair
now recognizes the gentleman from New Jersey, Mr. Gottheimer,
for 5 minutes.
Mr. Gottheimer. Thank you, Mr. Chairman. Thank you, Ranking
Member.
We know that professional single-family rentals and build
to rent providers have built more than 100,000 new homes in the
past decade, adding to the supply. We know that we are about
4.5 million units short in the country which, of course, leads
to higher prices in most of our communities and less mobility,
because of mortgage rates, are stuck in their home that they
are currently in even if they want to move. So we keep adding--
I know the build to rents and single-family rentals (SFRs) are
adding supply and building to rent and giving people options to
actually go somewhere.
My concern here--and I just want to see if I am getting
this wrong. My concern is if this disappeared, if suddenly you
said you cannot do build to rent, what would happen to our--
what do you think would happen to our housing supply and--you
know, it seems to me this would be--it is a basic supply and-
demand thing, but I could be missing something here. Mr.
Wonderful, I do not know if you want to start.
Mr. O'Leary. Well, you are asking what would happen to the
housing supply if what?
Mr. Gottheimer. If suddenly we told the single family
rentals and the build to rent folks we prevented that from
going forward, from building to rent. Seems like we would lose
supply, right?
Mr. O'Leary. Well, my whole--New Jersey is an interesting
place because you have got a housing issue there too----
Mr. Gottheimer. Huge housing issue.
Mr. O'Leary. Yes. I would love to put money to work there
but you got a lot of permitting issues as well. You also have
rent control issues there. You know, it is a very----
Mr. Gottheimer. And some of the urban areas----
Mr. O'Leary. Yes. I mean, think about it this way--and I
think you raise a really good issue. I am just a guy with a lot
of money to put to work and so my investors say, ``Where is the
next project?'' I say, ``New Jersey,'' they go, ``I do not
think so.'' What do you got in----
Mr. Gottheimer. Mostly because of permitting and the time
to build?
Mr. O'Leary. Yes, because the--remember, I am 50 percent
debt, and debt needs uptick certainty.
Mr. Gottheimer. Right.
Mr. O'Leary. I also need at least, as Brian brought up
earlier, if the CapEx on a building is 3 percent a year and you
have got a cap on rent control, he is right. There comes a time
when the building is worthless, because you cannot fix the
plumbing anymore. This is a huge problem, and you have it in
your State, and you have massive demand. So if you fix that, if
you fix that, you will have capital like that because it is a
very desired location for sovereign wealth, 100 percent New
Jersey, if you could fix that problem.
Mr. Gottheimer. Of course you do not want to be in
socialist New York. You want to be in capitalist Jersey.
Mr. O'Leary. No, no. I am happy to--listen, I am agnostic.
I work with leadership that helps me get a permit. It is that
easy.
Mr. Gottheimer. So on the point of insuring, in my opinion,
what I think is really important is that we have supply and we
do everything we can to get supply up, we know that the cost--
renting a single-family home is 30 percent cheaper than buying
one, right? So for a lot of people, a lot of my constituents,
they tell me this is their only option. They can only rent. A
lot of them, of course, want to be in a lot of these
neighborhoods. You know, in Jersey, we have got the best
schools, so people want to be in a lot of these neighborhoods.
Single-family rentals give children and families access to
those neighborhoods and at a lower price. We know that people
get a great education, how important it is for long-term
success.
So it strikes me, should families not--and I will start
with you, Mr. Moore. Should families not have the option to
choose rentals to give their children access to better schools
and better neighborhoods? This is especially true for veterans
and nurses. It strikes me that makes sense, no? Mr. Moore? That
is you.
Mr. Moore. I am sorry. Does what make sense? Say that
again.
Mr. Gottheimer. To give people--give them the ability to
get a rental so they can have access--I know a lot of families
in my district would not be able to afford to buy a house
because it is expensive, so their only option is to rent
because they want their kids to go to these great schools. Am I
getting that right?
Mr. Moore. Well, look. We need to do everything we can to
increase the supply of homes so people--so that you can have
lower-price homes so people can afford to buy them. I mean, the
great thing about home ownership is that people put roots in
the community, right? So we want policies that make these homes
affordable and for so many reasons, including what my fellow
panelists have talked about, regulations and building codes
that are outrageous, et cetera, we are making it--we are
pricing people out of the American home and there are ways that
we can increase the supply.
One other quick thing to think about, by the way, this is
partly demographic. You know, I was born in 1960. That was the
peak year of births in the baby boom. It is interesting we are
having this conversation about, well, an inadequate supply of
homes right now. Well, 10 or 15 years from now, we might not
have that supply. We might have an oversupply of housing. Just
something to think about.
Mr. Gottheimer. It is a great point. Thanks. I yield back.
Thank you.
Mr. Huizenga. The gentleman's time has expired. With that,
the chair now recognizes the gentlelady from Michigan, Mrs.
McClain, who is also the chair of our Republican House
Conference.
Mrs. McClain. Thank you.
Mr. Huizenga. She is recognized for 5 minutes.
Mrs. McClain. Thank you and thank you all for being here. I
appreciate it.
Mr. Brooks, I would like to start with you if that is okay.
Obviously, we have talked about it, ad nauseam, right?
Regulation, access to capital, et cetera, et cetera, is very
important but I want to talk about, if we could, some action
items.
Chairman Hill's Main Street Capital Access Act, right, I
believe it will lower costs for local, community banks, and
rural institutions by lowering compliance costs for banks
certified as low risk and healthy, right?
We have gone from roughly 14,000 banks in the 1900s to
4,200 banks today. I would like to hear your opinion on how
much of that decline in the banking industry is due to
overregulation, versus normal market conditions because
sometimes we have a--we say we are capitalists, but I do not
know if I really like the free market. So I would like your
opinion on that.
Mr. Brooks. Well, I appreciate the question, Congresswoman.
Mergers and consolidation usually happen when you need to
spread your costs across a larger asset base, right? And so, if
compliance and other nonproductive activities--and when I say
``nonproductive,'' I mean nonrevenue producing activities--
become a major burden, you have to put them inside of a larger
institution so that you have the revenue base to support the
compliance. So there is no question that is one of the factors
that has led to the shrinkage in banking.
The other thing, as a side point, that has led to the
shrinking in the number of banks, of course, is that at some
point we stopped chartering new banks. We went about 15 years
post-financial crisis where we chartered one bank or zero banks
a year at the Federal level. Previously the number was in the
double digits every single year. Compliance is a huge burden.
It really is and the point of the Main Street Act, and one of
the reasons I applaud it so much is because small banks do not
have the kind of complex operations and they typically do not
support the kind of systemic risks that J.P. Morgan does.
Mrs. McClain. Sure.
Mr. Brooks. So holding the same set of stress testing
environments, which are obviously different for small banks,
but those kinds of things for small banks really do not make
sense.
Mrs. McClain. Appreciate that.
Second is you have said and I thought this very
interesting, the Dodd-Frank made compliance so big and so
expensive, excuse me, that it is too small for banks to
succeed. I thought that was a really interesting quote. Can you
elaborate on that?
Mr. Brooks. Well, with Dodd-Frank----
Mrs. McClain. I am sorry. We have all heard, Oh, my gosh,
it is too big to fail but too small to succeed, I think, is
interesting----
Mr. Brooks. Yes. It is 100 percent true. So what Dodd-Frank
did is--and I think some of this was unintentional, and some of
it was just an overcorrection in a crisis, right? But now we
have history, so we know what was good and what was bad about
it. Dodd-Frank almost singled out housing finance for negative
treatment compared to almost everything else. The reason we did
that is because of this belief somehow that the financial
crisis was exclusively a mortgage crisis and the idea was,
well, we have these long-dated mortgages, and these short-dated
deposits, and that mismatch creates inherit risk, so you have
to hold enormous capital against your mortgage book. If you are
a small bank, if you are a sub $1 billion, let us say,
community bank on Main Street USA, like in my hometown, you
cannot hold that kind of capital----
Mrs. McClain. It is just not feasible.
Mr. Brooks. Right. So what happened? What happened is, all
of those loans got sold to Fannie Mae and Freddie Mac, and
banks no longer held any credit risk.
Mrs. McClain. I appreciate it.
Mr. O'Leary, if I could switch to you for a moment. Mark
Carney has twice called for reducing the dollar's role as the
world's reserve currency; once in 2019, and then last month at
Davos. What threat, in your opinion, does that pose to the
dollar's global status? Can you comment on that?
Mr. O'Leary. You are talking about Carney's speech at
Davos?
Mrs. McClain. Yes, sir.
Mr. O'Leary. Yes. I actually believe, as an optimist--you
know, I am a Canadian citizen, I am Irish, and my kids are
Americans. I have a foot in both economies. There is a huge
opportunity to work out a Canadian-U.S. situation to the
benefit of both countries in a different way.
The problem is, you saw recently Modi got a deal done
finally, just days ago. That was done because Modi met with
Trump privately. We need this now with Carney and Trump. We are
in a bad place. I am saying that this makes no sense, and I
think the only way to get it fixed, because we know the
President is a very transactional individual, and I endorse his
policies. I do not get involved in politics. I never made money
doing that. I am a policy guy.
What we need here is to deal with everything you just said
is to have Carney or Trump find a place without anybody, no
cameras, not a Zelensky-type meeting, just the two of them go
work it out. There is so much opportunity because Canada has
all the national resources, the largest economy on earth needs
right here----
Mr. Huizenga. The gentleman's time--the gentlelady's time
has expired.
Mrs. McClain. Could be a win-win for both countries.
Mr. Huizenga. The gentlelady's time has expired----
Mr. O'Leary. Yes.
Mr. Huizenga [continuing]. regrettably, because it is an
important conversation, but I do need to keep this on time.
With that, the chair recognizes the gentleman from
Illinois, Mr. Casten, for 5 minutes.
Mr. Casten. I just make the quick observation that we could
actually cancel tariffs on Canada this week if the Republicans
decided to pull the vote. Get some thought at the Rules vote
later today.
I want to talk about the--sort of the third rail that we
all know but we do not like to talk about because we will get
in trouble if we talk about it. I think, Mr. Moore, you had
alluded to this in your opening remarks that housing is both an
expense, and we get political credit for bringing expenses
down, and it is also an asset, and we get political credit for
making assets more valuable. The math that we all know but we
do not like to talk about is that 66 percent of Americans own
their homes. Even greater percentage of voters. For most of
those Americans, that is the majority of their wealth. So, it
would be politically suicidal for any of us to go out and
aggressively lower the cost of prices unless we follow the
advice of Mr. Barr, which I share: supply, supply, supply.
Right? You know, that is the lever that is politically possible
for us, whatever we think about that in some optimal space, but
I think it also creates this challenge where--all of us agree
that affordable housing is good policy. All of us understand
the politics and you got to watch politicians' feet because
their lips will say things differently than where their feet go
sometimes.
I guess I want to start with you, Mr. Moore, because
President Trump has directed large-scale purchases of mortgage
bonds, proposed allowing people to put their 401(k) as a
downpayment in homes among other proposals. Redfin's chief
economist said that if enacted, those proposals would increase
demand. That is going to raise the price, right?
Mr. Moore. I like that policy.
Mr. Casten. Just in a vacuum, those measures, per Redfin,
will raise demand, which means we are going to raise the price
of people's homes, right? It is politically smart because--for
a lot of homeowners.
Mr. Moore. Well, look. This is a conundrum, no question
about it, because if you increase the demand for housing then
the price of housing will go up----
Mr. Casten. I am just making the point--that is a--that is
good for homeowners. It is bad for home buyers.
Mr. Moore. If you ask me, do I support Trump's idea of----
Mr. Casten. I am not--I am not asking you----
Mr. Moore. I do favor that. I think it would----
Mr. Casten. Okay. So then separately, we have got on the
supply side--Kansas City Fed researchers said that immigrants
who joined the workforce ease labor shortages and help
stabilize the labor market. BOS data said that we have--
American men have a labor force participation rate of 66
percent in 2024. American immigrant men had a labor force
participation rate of 77 percent.
According to a Harvard analysis, immigrants make up one in
three workers nationally in the construction sector. In major
metro areas like Dallas, Houston, Miami, they are 60 percent of
construction workers.
Mr. O'Leary, I would shift to you. If that is the workforce
in construction, do mass deportations of the workforce increase
or decrease supply?
Mr. O'Leary. You have the same issue in farming, actually,
as you do in construction. The solution to this might be a
compromise where----
Mr. Casten. I am not asking for opining on immigration
policy.
Mr. O'Leary. Right.
Mr. Casten. I am simply saying when 60 percent of the
workforce is being deported, does not that hurt supply? I have
been in business. You have been in business--I do not know how
to deliver----
Mr. O'Leary. I do not agree with you. I do not think it is
60 percent of the workforce. That sounds----
Mr. Casten. Well, 60 percent of the construction workers in
metro areas, that is according to Harvard. You are not agreeing
with me. You are agreeing with Harvard. It is also one in three
workers in the construction sector. I think any analysis from
the Fed--is the factors differentially affected.
So we are in this situation where you have actual policies
from the White House that are increasing demand, actual
policies that are reducing--and I will give you another
question, Mr. O'Leary. Raising the price of kitchen vanities,
does that make homes cheaper or more expensive?
Mr. O'Leary. You are speaking of tariffs now?
Mr. Casten. Uh-huh.
Mr. O'Leary. Well, the tariff policy has been, for decades,
reciprocal----
Mr. Casten. I am not talking about normal tariff policy. I
am talking about the bizarro tariffs. National Association of
Home Builders said that the liberation day tariffs will raise
the cost of a home by $10,000. You disagree?
Mr. O'Leary. I invest in that space. That is not our
challenge, but it is not something we are worried about as much
as----
Mr. Casten. I am pushing back because you are smart people.
Basics of supply and demand are not complicated. The only
reason this is complicated is because we have gotten to a
point--we are saying xenophobia is bad for the economy. Tariffs
are bad for the economy. This is not controversial but to
acknowledge that you have to admit that there are economically
illiterate people in the White House--and the sooner we can do
that, the sooner we can actually have a conversation about
lowering the cost of housing instead of this nonsense that we
are doing right now that is pissing off every single American
which, by the way, is bad policy.
Mr. Huizenga. The gentleman's time has expired.
Mr. Casten. I yield back.
Mr. Huizenga. The gentleman yields back. With that, the
chair recognizes the gentleman from Wisconsin, Mr. Steil, who
is the chair of the Subcommittee on Digital Assets, Financial
Technology, and AI. He is recognized for 5 minutes.
Mr. Steil. Thank you very much, Mr. Chairman. Thanks for
holding today's hearing.
We just heard from our colleague from Illinois. One in four
construction workers, I think was the stat, in his opinion, is
here in the country illegally. That may be true. I do not have
the stat in front of me, but it does not doubt--I have no doubt
that Illinois has major problems considering its sanctuary city
status and giving driver's licenses to illegals. So when we
vote later this week on photo identification, I think it should
not be lost on anybody why we need citizenship verification
when you have States like Illinois giving illegal immigrants
identification that would otherwise be able to be utilized to
vote, although illegally.
Let us dive into the topic at hand. How do we make life
more affordable for American citizens? We have seen all sorts
of policies being implemented across the country as it relates
to housing, some good, some bad.
Mr. O'Leary, you were on CNN recently talking about New
York City's new mayor, housing policies. New York City's
approach is putting in place price controls restriction on that
side. Do not worry about supply because, of course, we are 6
million units under supply. So instead of focusing on supply,
they want to restrict pricing. What are the real-world
implications when you put in place price controls like that?
Mr. O'Leary. Well, New York is a very desirable market,
number one. I, for the first time, got to meet Mamdani
recently, and I had a very brief conversation with him as just
one investor.
I think he has made a lot of promises about the outcome for
the city, and now he actually has to deliver. So the market is
going to do its own assessment day by day in terms of housing,
because it is impossible to maintain rent controls on new
builds. You will not get a new build. No one is going to invest
in that and so, I think that was--I was interested in that
question. I am just waiting for policy.
Everybody is waiting for policy there. I would not have
voted for him, but I want him to succeed now. So he is--the
market is a nasty thing because it does not care. It is not
emotional and they need a lot of capital. They need a lot of
debt. They need a lot of equity, and they need policy. We have
not heard any yet, so I am kind of saying, like everybody else,
I am waiting.
Mr. Steil. So you are in a little bit of a wait and see
approach. Let me come over to you, Mr. Moore. In particular,
you have done some analysis on more affordable metro areas,
more expensive metro areas. What do you see between the--what
policy differences do you see that we should be looking at here
in this committee?
Mr. Moore. Well, I mean it is simply a fact that the cost
of living--this is one of the biggest stories in America. The
cost of living is much, much higher in blue States than it is
in red States. That is just a fact. So if you look, for
example, at one of the charts in my testimony, you will see
that the areas where housing is more affordable, the cities,
are--I will give you the ones with the most affordable housing:
San Antonio, Virginia Beach, Memphis, Houston, Birmingham,
Jacksonville, Oklahoma City, Tucson, Atlanta, St. Louis. What
do they have in common? Oh, yes. They are all in red States.
What are the most expensive places to buy a house? San
Francisco, San Jose, Los Angeles, San Diego, New York, Seattle,
Boston, Sacramento.
I mean, this is not complicated. All of these regulations
and the high taxes, all of those things that are imposed in
blue States add to the cost of buying a house and make housing
less affordable. It is that simple.
Mr. Steil. So let us build on that. Let us shift away just
from housing. You have explored environmental, social, and
governance (ESG) policies at some of the Nation's largest
companies. I am of the view that proxy advisors ISS and Glass
Lewis have a disproportionate say on boardrooms trying to drive
forward a liberal agenda. We are seeing maybe a shift away from
that, but what are the implications of driving forward in a----
Mr. Moore. That will make--as we move away from ESG--and
the good news is that banks are moving away from those
policies. That will reduce costs.
Mr. Steil. Mr. O'Leary, do you have a view of some of the
ESG policies that we have seen companies engaged in?
Mr. O'Leary. They have to compete in a market that is
changing all the time. These proxy services, for example, are
not transparent enough for me. I do not understand why they
make the decisions. I wish we would force them to be
transparent. That would be very helpful because they make some
pretty outcome decisions, and I cannot see for the life of me,
why, and so they will not tell me. I think that is a problem
and a lot of CEOs and boards are starting to look at this
saying, wait a second, something wrong here.
Mr. Steil. Well, they have a huge conflict of interest. We
have legislation in this committee that I have authored that
would address that conflict. There is a whole lot of work we
need to do in that regard. I appreciate all of you being here
today and your testimony. Mr. Chairman, I will yield back.
Mr. Huizenga. The gentlewoman's time has expired. The chair
now recognizes the gentlelady from Massachusetts, Ms. Pressley,
who is recognized for 5 minutes.
Ms. Pressley. Since Black history is American history, I
will say happy Black History Month. On the 100th anniversary of
Black History Month, I refuse to allow our contributions to be
relegated to a footnote, or to be whitewashed by an executive
order.
Dr. Hamilton, I am grateful for your leadership in shaping
the national conversation on baby bonds, and I thank you for
your partnership and counsel in the drafting of my baby bonds
legislation in partnership with Senator Booker. Republicans and
Trump will not give you credit, but we know that Trump accounts
exist only because of your genius and the work on the ground
that you laid as spearheading the issue of baby bonds. So I
want to give you your flowers officially on the congressional
Record. You have been a pioneer in confronting the racial
wealth gap.
I represent the Massachusetts Seventh Congressional
District, and a report by the Federal Reserve Bank of Boston
found--and this will shock many--but that the median net worth
for white households in Boston is $247,500, while for Black
households it is a mere $8. That has everything to do with
housing. Dr. Hamilton, would you agree that home ownership
plays an essential role in wealth building?
Mr. Hamilton. Yes and thank you, Congresswoman. I honestly
am very honored and proud to have that accolade that you
offered me.
Ms. Pressley. Thank you and we are grateful for you.
So yes, homeownership is essential to wealth building. I
believe that a majority of the public agrees with and
acknowledges that. In fact, during the 1950s and 1960s, one of
the foundational bricks that built America's middle class was
homeownership. It was the advice given by the government to
citizens and passed down from parents to their kids.
Homeownership symbolized financial opportunity and freedom, but
we know what was also taking place in the 1950s and 1960s: Jim
Crow, Jim Crow discrimination.
Black families who sought homeownership were held back by
red tape, limited to redline neighborhoods, and faced blatant
racism from banks. For those who managed to secure a mortgage
and buy a home, the value of their homes were grossly
diminished by an appraisal system rife with racial bias and
that same appraisal system is around today. Just look at the
data.
Last year, a report estimated that Boston's Black
homeowners lose up to $2.3 billion in wealth because homes
owned by Black families are valued about 18 percent less--they
can literally be right next door to each other--than comparable
white-owned homes, or roughly $125,000 but this is not just in
my district. It is happening all across the country.
I ask unanimous consent to enter into the record a March
2024 article from the Bay State Banner titled, ``Boston Black
Homeowners Lose Billions to Biased Property Valuations.'' I
also ask to enter into the record a Brookings Institution study
titled, ``How Racial Bias and Appraisals Affects the
Devaluation of Homes in Majority Black Neighborhoods.'' Finally
I ask to enter a Freddie Mac analysis titled, ``Freddie Mac
Research Explores Causes For the Appraisal Evaluation Gap For
Homeowners in Minority Neighborhoods.''
Mr. Huizenga. Without objection.
[The information referred to was not submitted prior to
printing.]
Ms. Pressley. Dr. Hamilton, with my remaining time, for
Black families of all income levels, there is no getting around
a discriminatory appraisal system. Why does this matter for the
affordability crisis and the racial wealth gap?
Mr. Hamilton. You know, we should recognize when we cited
that most Americans own their home, that is not true for Black
people, and that is grounded in a history that you describe. It
is not happenstance. Indeed, as we have this conversation, one
of the problems is if we look at any analytical issue in an
historic way, it is myopic. So if we are revisiting the Great
Recession, if we are revisiting inflation in the pandemic, if
we are not telling the complete story, we are inaccurate.
Inflation was to deal with a pandemic--frankly, a plague
that we were faced--and we had supply chain issues. It is
almost miraculous that we are still not in a great recession
today.
The critiques of Dodd-Frank Act that we are hearing today,
we are losing the context by which it emerged. It is almost as
if we will repeat the same problems that we had in the past. Of
course we need smart regulation, but complete deregulation was
the root of the speculation that nearly brought down our
economy in two scenarios.
Ms. Pressley. Thank you, Dr. Hamilton. On the issue of the
appraisal system in particular, I just want to share that I was
proud to partner with Senator Warnock to introduce legislation
that would modernize the appraisal process to strengthen
transparency and accountability----
Mr. Huizenga. The gentlelady's time has expired.
Ms. Pressley [continuing]. consumer right to appeal if they
disagree with the evaluation.
Mr. Huizenga. The gentlelady's time has expired.
Ms. Pressley. Thank you.
Mr. Huizenga. With that, the chair is going to recognize
the gentleman from Pennsylvania, Mr. Meuser, who is the
chairman of our Oversight and Investigation Subcommittee and
who is celebrating his 39th birthday today. Well, that is what
you said, Dan. It was 39 but happy birthday, nonetheless.
Mr. Meuser. Thank you, Mr. Chairman. I am glad you are not
under oath, by the way. I am 40.
Well, thank you. Thank you very much to our witnesses. Very
important subject. This committee, I think as you know, and the
Trump Administration are working on correcting course to our
economy, removing barriers to growth, expanding housing supply
through the Housing for the 21st Century Act, strengthening
capital formation through the INVEST Act, revitalizing
community lending through the Main Street Capital Access Act,
all bills that have been passed.
Taken together, these efforts reflect a broader policy
shift away from government driven market distortion and toward
supply side growth, capital formation, access to capital,
housing affordability, pro-growth, what we used to call supply
side, but we do not want to necessarily call it that but that
is what it is. More domestic supply, the more we make in the
United States. We exceed demand with supply, inflation comes
into check, comes down, and even prices start getting less. We
create competition at the same time.
Mr. O'Leary, good seeing you. From your vantage point as a
venture capitalist, in terms of job creation, business
formation, long-term economic growth, what benefits do come
from this regulatory and tax supply side initiatives and
approach?
Mr. O'Leary. I think when we were discussing regulation
before, in all 11 sectors, if you gave an individual--an
entrepreneur--and the way I look at it I go into these classes
of students, 240 in the cohort, and I know with certainty, and
I tell them this, that in 25 years two-thirds will work for the
other third of the class. That is basically the ratio when
students emerge. When you ask these individuals what would you
rather have, reduction in tax or reduction in regulation, it is
always reduction in regulation because they assume with taxes
they are competing with everybody else at the same tax rate. So
what they want is a path to be able to deploy capital with less
friction. By the way, applies to all 11 sectors of the economy.
We can talk a lot about real estate. That is the most recent
sector of the S&P 500. That is the 11th sector, but every other
sector also has issues around regulation.
Something has happened over the last 20 years that somebody
decided, through multiple administrations, that more regulation
is better than innovation. I can assure you that is not the
case and it is now time to really take a jackhammer to that
stuff and get rid of it and let the economy flourish. The
market believes that is going to happen, because you are seeing
new highs every day in the DOW.
So somebody is optimistic out there. It is not just
domestic capital. Money is coming in from all over the world
into this index because they believe you are going to do it;
you are going to jackhammer regulations.
Mr. Meuser. Thank you. Yes. I was just with some folks who
do a lot of 7(a) loans and small businesses, and they say
access to capital continues to be the number one concern of
small businesses up to, as you mentioned before, Mr. O'Leary,
$50 million and such.
So, Mr. Brooks, the decline in community banks, how has it
affected mortgage availability, housing development lending,
and overall affordability?
Mr. Brooks. Well, Congressman, as I said earlier, one of
the biggest issues in mortgage finance is who bears the risk.
Over the last 15 years since the financial crisis, it has
mostly been the government. So bank formation has been at an
all-time low. That has reversed in President Trump's second
term, but we have very few new bank starts until the last 12
months and the banks that do exist, especially the community
banks, have more or less been told that mortgages are a risky
asset and you should stay away from them. So as a result,
community banks tend to be local small business lenders and not
very much else.
That can change. We know what a community bank driven
housing finance system looks like because we had it for 80
years between the Great Depression and the financial crisis. It
worked pretty well. Now we have a government balance sheet for
all of this which is terrible. My main point here is, it is
desirable for community banks to drive the housing finance
system because community banks are relationship bankers. They
know the clients. They know the credits and they know the
collateral better than any Washington, DC or Wall Street credit
manager will ever know. So it is in all of our interests that
community banks deliver what they used to deliver, which was
the majority of housing finance.
Mr. Meuser. Certainly one of our axioms here has been to
make community banks great again under our chairman, French
Hill.
Dr. Moore, the affordability relief, inflation moderation,
wages rising, mortgage rates easing, what extent does housing
market depend on sustaining this pro-growth economy?
Mr. Moore. So, I will summarize it in the 13 seconds I have
left, which is what the chairman said at the outset. The best
solution to all these problems, including housing
affordability, is economic growth. The stronger economic
growth, people's incomes rise, they can afford more, so keep it
up. The most positive feature----
Mr. Huizenga. The gentleman's time has expired----
Mr. Moore [continuing]. of your tax bill was the allowing
the business on their capital purchases----
Mr. Huizenga. The gentleman's time has expired----
Mr. Meuser. My time has expired. Thank you, Mr. Chairman.
Mr. Huizenga. Happy birthday. With that, the gentleman from
New York, Mr. Torres, is now recognized for 5 minutes.
Mr. Torres. Thank you, Mr. Chair.
Dr. Hamilton, your testimony spoke about the importance of
public investment, public infrastructure. After World War II,
the U.S. saw the emergence of the largest middle class the
world had ever seen. Is it fair to say that one of the most
important ingredients in the creation of post-war prosperity
was public investment?
Mr. Hamilton. Absolutely.
Mr. Torres. Public investment and electrification and
transportation, and mass homeownership, and mass education. So
the lesson of history is that public investment and
productivity are not mutually exclusive but mutually
reinforcing.
Mr. Hamilton. I think that is the point. The point is that
public investment can come in many forms. We can build up
public infrastructure, and we can invest directly into the
American people. So when we start talking about this
distinction between supply and investing in people, that is a
question of values and how we want to do it. I think there is a
risk, and we have over indexed on investing in firms to the
point that they are able to turn around and exploit the
American people because of the asymmetry of power. When we have
people with low endowments, people with unstable jobs, people
without a base level of resource by which to compete, not only
do we stifle their abilities to produce and engage, but we
leave them vulnerable to the whims of those that have power.
Mr. Torres. For me, it is no accident that the post-war
golden age of public investment coincided with the golden age
of American productivity growth. During the golden age,
American productivity grew by an average of 2.5 to 3 percent a
year for 25 years. The economy itself grew by an average of 4
percent a year for 25 years. If the U.S. had sustained that
same level of productivity growth over the last 50 years, the
U.S. economy would be twice as large.
Mr. Hamilton. What is more, Congressman, the real wage
growth rate was commiserate, so it was an inclusive growth.
With that high level of growth, workers benefited as well.
Mr. Torres. So you can have equity in economic growth. You
can have productivity in public investment. No need to create a
false choice where none need exist.
Mr. Moore, I know you are a great admirer of President
Trump. President Trump has repeatedly said, quote, ``I have
done more for the Black community than any other President with
the possible exception of Abraham Lincoln.'' In his mind,
Abraham Lincoln is a possible exception. Do you agree with that
statement?
Mr. Moore. I will say exactly what I said to the previous
Congressman, which is that what this country needs most to
solve so many of our ailments is economic growth. The numbers
over the last----
Mr. Torres. I asked specifically do you agree that he is
the best President for the Black community with the possible
exception of Abraham Lincoln?
Mr. Moore. I am sorry. You said----
Mr. Torres. Do you think Donald Trump is the best President
for the Black community, with the possible exception of Abraham
Lincoln? Do you agree with that sentiment? I mean, I think it
is delusion of grandeur, but I am interested to----
Mr. Moore. I think the two Presidents in my lifetime who
have done the most to increase the prosperity of America have
been Ronald Reagan and Donald Trump.
Mr. Torres. Do you think Donald Trump's legacy exceeds that
of Abraham Lincoln when it comes to the Black community?
Mr. Moore. I am sorry. Do I think----
Mr. Torres. Do you think he has done more for the Black
community than Abraham Lincoln?
Mr. Moore. I think that Trump is not a racist. I think
Trump is----
Mr. Torres. I am not--I never said he was a racist. I said
he has done----
Mr. Moore. I am saying he pursues policies that are good
for everyone. I mean, I think----
Mr. Torres. Do you think the President----
Mr. Moore. The policy that Trump----
Mr. Torres. Mr. Moore, I think this is a simple question.
Do you think President Trump has done more for the Black
community than the President who abolished slavery?
Mr. Moore. I think Trump's policies are working for Black
Americans.
Mr. Torres. More than Abraham Lincoln? How about Lyndon
Johnson? Has he done more for the Black community than
President Lyndon Johnson?
Mr. Moore. I do not know--I am not going to rank all the
Presidents and what they have done. I am saying what he has
done so far in this term----
Mr. Torres. Mr. Hamilton, do you have an opinion on this?
Mr. Hamilton. Obviously, the answer is no. Let me even add
one other point about that period that you cited, Congressman.
The problem with that period is that it was not inclusive. We--
--
Mr. Torres. Right.
Mr. Hamilton [continuing]. also know--all right.
Mr. Torres. Right. African Americans were systematically
excluded from higher education and homeownership, and so
instead of intergenerational wealth, you have a legacy of
intergenerational poverty.
Mr. Hamilton. Absolutely, there are lessons to learn from
that. The lesson is, unlike excluding people and attacks on
diversity, equity, inclusion, and accessibility (DEIA), what we
need is affirmative inclusion. We can ensure that everybody
benefits from the largesse of America. We need to design,
manage, and implement policies in a way to make sure that your
humanity alone makes you eligible, and you are not excluded.
Mr. Torres. I see my time has expired. Thank you.
Mr. Huizenga. The gentleman's time has expired. With that,
the chair will note that we do have a one o'clock hard stop, so
we are trying to get our folks in as quickly as we can. The
gentlewoman from California, Mrs. Kim, is recognized for 5
minutes.
Mrs. Kim. Thank you, Chairman and Ranking Member, for
holding this hearing and I want to thank all of our witnesses
for joining us today. Last year, I was proud to work with
President Trump on getting key provisions in the Working
Families Tax Cuts Act that is already signed into law, and I am
so excited. A lot of Americans will see the benefits of it as
they file tax returns. Thanks to his leadership, Americans are
going to be super charged when they file.
So one of my favorite aspects of the bill is Trump accounts
that will be seeded with $1,000 for children who are born
between January 1 of 2025 and December 31 of 2028. Last week,
when Secretary Bessent was before our committee, he shared that
already, over 1 million families had signed up for that
account.
Mr. O'Leary, good to see you again. Can you talk about how
you think these Trump accounts will lead to a more financially
literate generation of Americans?
Mr. O'Leary. Yes. I think it is a great innovation. I
endorsed it at the time it was announced. I think getting the
word out is very important as you are doing now.
What is unique about this in a bipartisan way--and I spent
so much of my career in education, educational software, and
most of the policies for that came from New York, Florida,
Texas, and California. We were very successful in reading and
math and advanced scores there. We failed miserably in
financial literacy. So with this account, by the time the child
turns 5, as we continue to advance in technology, or 6, around
that age, on whatever device they have, they are going to see
their own personal net worth. If it grows to the index of the
market, with no further investment than 1,000, it will get 8 to
12 percent a year is likely.
That will trigger an interest at an early age to understand
what this is, how it works, and a great opportunity for the
parents to explain all aspects of financial literacy, including
debt, and how, if you have too much debt, you will lose what is
on your phone here.
I mean, I wish I had this for my kids. It is a great idea.
I cannot say enough good stuff about it. I think it is
completely bipartisan and what I like about it for my
employees, I can also invest in the employee by advancing their
family.
So imagine if you are trying to retain a real great
engineer, a software engineer, and they just had a kid, and you
say to them, ``Look, not only are you getting your bonuses here
but I am giving to your family by that child. I want to donate
to that too.''
So I think you have already seen J.P. Morgan get behind
this. Michael Dell put in another $6.2 billion with his wife
Susan. It is a great innovation. I cannot find anybody who does
not like it on either side. It is a great idea. So you are
right.
Mrs. Kim. Especially those of us in California and New
York, New Jersey, we are going to do everything we can to
amplify the benefits of Trump accounts. You may know, I serve
as co-chair of the Financial Literacy and Wealth Creation
Caucus, and I know this could be one of the tools that we can
utilize.
It is so hard to get kids' attention to financial literacy.
However, if they know that they already have $1,000 that would
continue to grow with the power, or I say, the magic of
compound interest, I think they are going to be pretty much
very, very excited, and they are far more likely to invest and
use this so they can utilize the funds to create the long-term
wealth.
Continuing with that, I know, Mr. O'Leary, throughout your
career, you have been a long-standing advocate for
diversification of investment. So talk about why that
investment strategy is so important to avoid financial
disaster.
Mr. O'Leary. Well, what we have all learned, diversity is
the only free lunch in investing, and I learned that from my
mother. She had a rule: no more than 20 percent in any one
sector, no more than 5 percent in any one stock or bond and
that has really saved my hiney over the years with lots of
volatility.
Lately, there are new asset classes emerging, and I think
it is really--obviously crypto is volatile, et cetera but I
love the idea of financial literacy talking about
diversification and when you index, most of these accounts are
just going to own the S&P 500. That is 500 stocks across 11
sectors. Now, that is diversification. That is why this is a
great learning tool. It is a fantastic educational process.
It is amazing when you can find something where nobody
dislikes it. That never happens in this town.
Mrs. Kim. I agree with you 100 percent. You are right on
that, that when you spread investments across sectors and
companies, you are much more resilient to market shifts. That
is why I am so proud that--we are working on the Supporting
Early-Childhood Educators' Deductions (SEED) Act that will not
only make Trump accounts permanent but also allow our American
working class families to be able to also invest in crypto
assets.
Let us talk quickly. In the last 5 years, cryptocurrency
adoption and value have dramatically increased by allowing
asset diversification through Trump accounts and will allow
American families to continue to benefit from the
democratization of finance.
Mr. Huizenga. The gentlelady's time has expired----
Mrs. Kim. I have so many questions for you and
conversations I would love to have----
Mr. Huizenga. The gentlelady can----
Mrs. Kim [continuing]. time is up. I yield.
Mr. Huizenga. The gentlelady can submit those questions in
writing, and we will pass those along.
With that, the chair now recognizes the gentlelady from
Michigan, Ms. Tlaib, for 5 minutes.
Ms. Tlaib. Thank you, Mr. Chair.
As a good colleague that I am, Congresswoman Sylvia Garcia
had a question I am going to ask all of you yes or no since we
have a cutoff. Mr. Brooks, do you believe affordability is a
hoax? Yes or no?
Mr. Brooks. Well, it----
Ms. Tlaib. Yes or no?
Mr. Brooks. It exists. I have seen it happen.
Ms. Tlaib. Okay. Mr. O'Leary?
Mr. O'Leary. I did not----
Ms. Tlaib. Is affordability a hoax? Is it a hoax?
Affordability. Is it a hoax?
Mr. O'Leary. Hoax.
Ms. Tlaib. Yes. We know somebody that keeps saying that.
Mr. O'Leary. No.
Ms. Tlaib. Okay. How about you, Mr. Moore?
Mr. Moore. Affordability is higher now--affordability is
higher now than at any time in the history of the United
States.
Ms. Tlaib. Dr. Hamilton.
Mr. Hamilton. It is not a hoax.
Ms. Tlaib. Okay. I also like to bring in my district.
Detroit just passed the Rx program. It is an incredible program
with cash assistance to new mothers in our community and
combating poverty in our country has been really challenging.
It has been kind of bizarre to understand but the more I am
here, I understand that--you know, studies by Harvard, for
instance, 65 percent of working age renters, household struggle
to pay for basic necessities after paying their rent. It just
keeps going up. It is not even going down. Study after study.
So, Dr. Hamilton, do you see a role in direct assistance in
providing financial stability, addressing affordability crisis,
and promoting what you call authentic freedom?
Mr. Hamilton. Yes. It is power. Those studies that--those
interventions and the studies that accompany those
interventions demonstrate that people were able to do a lot
more from the simple intervention of cash.
Ms. Tlaib. I sat down with homeless youth, and that is what
they told us, We understand you want to give us housing and
everything, but we also--we need to go to work, we need gas
money, all these kinds of things.
My Economic Dignity for All Agenda encompasses the baby
bonus, the child allowance, a monthly payment to adults that
builds on such research that Harvard was talking about in
regard to cash assistant being more impactful. Zooming out, Dr.
Hamilton, you noted that in your outcomes that you see today,
including affordability crisis and massive inequality, a result
of concentrated economic and political power and that is what I
feel like my colleagues do not have the courage to take on. So,
I recently introduced a resolution calling on Congress to end
the political economic dominance of wealth of the wealthy few,
halt the subsidiaries and the tax advantages that concentrate
economic power, and reinvest in the needs of the American
people.
Dr. Hamilton, if we are really serious about adjusting
concentrated economic power, the affordability crisis, how
would you think differently about public policy? What policies,
like taxing the rich, which are incredibly popular across the
board--go ahead and poll all kinds of districts. They will tell
you to tax the rich--rebuilding labor movement, breaking up
monopolies and promoting democratic forms of ownership to
displace corporate power. Should we prioritize and think about
those kinds of policy?
Mr. Hamilton. I mean, we obviously need to facilitate the
collective, the ability--the collective right to bargain, the
ability for labor to formulate and be able to negotiate the
conditions of their workplace. That is a good place to start.
The taxing the rich not only offers additional public resources
but it also curtails some of that political power.
Ms. Tlaib. Yes. It is fairness, too. Most of the people we
want to tax, we are subsidizing their workers' health insurance
and food assistance. I mean, it is kind of like this game of
you are not going to pay your workers enough but the public is
going to give you subsidiary--you are going to pay less in
taxes, we are going to give you tax breaks and giveaways, and
by the way, we will cover the health insurance and food
assistance programs that your workers need to survive.
Mr. Hamilton. If I may, I will say something, and I will
try to be brief. I know this does not get said in this room a
lot. We need inclusive economic rights.
Ms. Tlaib. That is right.
Mr. Hamilton. We talk about political rights, civil rights,
social rights, cultural rights but at the end of the day, if
you do not have a baseline level of resource, you are not able
to engage in a transaction. You are either at the whim of
somebody's charitable largesse, or the vulnerability of their
exploitation.
Ms. Tlaib. It is exhausting. It is like survivor mode. It
is crumbs.
Mr. Hamilton. So what we are talking about when we talk
about guaranteed income, when we are talking about baby bonds,
when we are talking about Medicare for all, it is simply a
baseline level of resource so that people will have the ability
to compete and engage.
Ms. Tlaib. I mean, my colleagues easily pressed the button
for tax breaks for the wealthy, the corporations, but they do
not seem to want to do it for our families. I mean it. I am not
saying this as some sort of gimmick. I really believe this is
the only way we can combat affordability crisis, poverty.
Dr. Hamilton, I would love your opinion on my Public
Banking Act. Public banking is something that I think we need
to really explore. North Dakota is a great example but keep
writing about it. Keep trying to push, again, the fact that we
need public banking in our country.
Mr. Huizenga. The gentlelady's time has expired----
Mr. Hamilton [continuing]. as long as people have a
baseline----
Mr. Huizenga. The gentlelady's time has expired----
Ms. Tlaib. Absolutely. I agree----
Mr. Huizenga. Thank you, Doctor. The gentlelady's time has
expired. The gentleman from Florida, Mr. Donalds, is recognized
for our last 5 minutes of questioning.
Mr. Donalds. Thank you, chairman.
I think it is important for this hearing that last year,
Members of Congress on the Republican side of the aisle
actually did pass the largest middle class tax cut in the
country's history. No tax on tips is not for billionaires and
corporate leaders. Everybody that is on tip sharing in the
United States is going to realize that when they file their
income taxes. So I think it is important for people to
understand that.
Mr. O'Leary, really quick. National Association of Home
Builders just came out with an article or a report maybe about
a couple of weeks ago. They said that for the cost of a new
home today in America, 30 percent of that cost is compliance
with the government. In the facilities that you are building,
what is the percentage of the construction budget that is tied
up in compliance costs?
Mr. O'Leary. Varies State by State. That 30 percent number
would not be correct for California. I believe it to be 45
percent there. So if you want to reduce costs in California,
you got to get a big axe out and start chopping the red tape.
I do a lot of commercial real estate, and what I have
learned is there are States--let me give you an example--Utah,
that has a program called Military Installation Development
Authority (MIDA), M-I-D-A. Other States should copy that
because it is an accelerated permit if you are bringing the
project of State importance, so that it guarantees certainty
for capital.
So large projects that cost billions of dollars require
some form of certainty path to permit. I really applaud the
leadership of Utah with that program. I learned about it
recently. It is something I have not seen anywhere else so they
have got something going there and other States should copy
that.
The permitting is generally in commercial real estate less
but it is more about the time. The hidden cost is the cost of
capital. The longer it takes us to get a permit, the more the
capital costs. States like New York and New Jersey right now
with the rent control threats, they got issues, and it is a
real big problem. I am just agnostic because I have to find
States that want the money and where you can build in. So three
cheers for Utah. I am a newbie, but I am loving that place.
Salt Lake City, here I come.
Mr. Donalds. It is interesting you say that because I know
there was a conversation around, ``Is affordability a hoax?''
Look, here is the true answer. What President Trump is talking
about is that Democrats caring about affordability is a hoax
because it is their economic policies. It is their public
policies here on Capitol Hill that have driven the fact that
compliance costs for new housing construction are exorbitantly
higher than they used to be. If a single-family home--and I
come off of commercial real estate. If a single-family home in
the United States costs $300,000, and a third of the cost is
government compliance and permitting, well, then that means
that the government, whether it is Federal, State, or local, is
driving up the costs on home acquisition for the American
people artificially.
To your point, Mr. O'Leary, we have to decide if we are
going to be efficient with the people's time and efficient with
their resources because contractors are not eating the costs to
develop property. Developers are not eating the costs to
develop property because they will go out of business. The
truth is, if we are going to be smart about this, we examine
all of the regulatory burdens, Federal, State, and local,
around constructing new housing, constructing commercial
development. To the point, I think you made it earlier, it does
not mean you are going to have a Wild West of no permitting but
there does have to be certainty in the environment, because
time is money and that does not change regardless of your
politics.
Dr. Hamilton, I know we were talking about--you were having
a conversation about public infrastructure earlier. Do you
believe the United States is spending less on public
infrastructure today than it did in the 1970s?
Mr. Hamilton. The question is how we spend it on public
infrastructure. When we----
Mr. Donalds. Dr. Hamilton, I do not want to cut you off. Is
the United States spending less on public infrastructure today
than we were in the 1970s?
Mr. Hamilton. The answer is nuanced. I can explain it, but
it is nuanced.
Mr. Donalds. I did not realize dollars were nuanced. You
are either spending them, or you are not. Are we spending more
or less? We can get to the nuance in a second.
Mr. Hamilton. The nuance is important----
Mr. Donalds. Are we spending more or less than we were in
the 1970s or the 1980s or the 1990s?
Mr. Hamilton. Inclusive of that $4 trillion tax cut for the
wealthy, the answer is yes, we are spending more on public
infrastructure. The question is for whom and to whom.
Mr. Donalds. So we are spending more. Yes or no?
Mr. Hamilton. Yes. Yes.
Mr. Donalds. Okay. So now that has been established, how
are you going to then make the argument that we are not
actually investing in things like public schools or roads or
healthcare infrastructure, et cetera, if the United States is
spending more today than we were in the past?
Mr. Hamilton. I just did. I said it is for whom and to
whom. So if we are spending $4 trillion directed by a tax cut
to the wealthy----
Mr. Donalds. Tax policy has nothing to do with spending
policy, sir. Those are two different things.
Mr. Huizenga. The gentleman's time has expired. The
gentleman's time has expired.
We have hit our--a little past our hard stop. I want to say
thank you to all of our witnesses today. This was appreciated
and insightful. I would like to also remind all of our members,
without objection, that they will have 5 legislative days to
submit additional written questions for the witnesses to the
chair. Questions will be then forwarded to the witnesses for
their response. Witnesses, we ask that you respond no later
than March 17 of 2026.
[The information referred to can be found in the appendix.]
With that, thanks again. Happy birthday, Mr. Meuser and we
are adjourned.
[Whereupon, at 1:05 p.m., the subcommittee was adjourned.]
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