[Congressional Record Volume 155, Number 9 (Thursday, January 15, 2009)]
[House]
[Pages H329-H359]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
TARP REFORM AND ACCOUNTABILITY ACT OF 2009
Mr. McGOVERN. Mr. Speaker, by direction of the Committee on Rules, I
call up House Resolution 62 and ask for its immediate consideration.
The Clerk read the resolution, as follows:
H. Res. 62
Resolved, That at any time after the adoption of this
resolution the Speaker may, pursuant to clause 2(b) of rule
XVIII declare the House resolved into the Committee of the
Whole House on the state of the Union for further
consideration of the bill (H.R. 384) to reform the Troubled
Assets Relief Program of the Secretary of the Treasury and
ensure accountability under such Program. No further general
debate shall be in order. The bill shall be considered for
amendment under the five-minute rule. The bill shall be
considered as read. All points of order against provisions in
the bill are waived. Notwithstanding clause 11 of rule XVIII,
no amendment to the bill shall be in order except those
printed in the report of the Committee on Rules accompanying
this resolution. Each such amendment may be offered only in
the order printed in the report, may be offered only by a
Member designated in the report, shall be considered as read,
shall be debatable for the time specified in the report
equally divided and controlled by.the proponent and an
opponent, shall not be subject to amendment, and shall not be
subject to a demand for division of the question in the House
or in the Committee of the Whole. All points of order against
such amendments are waived except those arising under clause
9 or 10 of rule XXI. At the conclusion of consideration of
the bill for amendment the Committee shall rise and report
the bill to the House with such amendments as may have been
adopted. The previous question shall be considered as ordered
on the bill and any amendments thereto to final passage
without intervening motion except one motion to recommit with
or without instructions.
Sec. 2. A motion to proceed under section 115 of the
Emergency Economic Stabilization Act of 2008--
(a) shall be in order only if offered by the Majority
Leader or his designee; and
(b) may be offered even following the sixth day specified
in subsection (d)(3) of such section but not later than the
legislative day of January 22, 2009.
The SPEAKER pro tempore (Mr. Ross). The gentleman from Massachusetts
is recognized for 1 hour.
Mr. McGOVERN. Mr. Speaker, for the purposes of debate only, I yield
the customary 30 minutes to the gentleman from California (Mr. Dreier).
All time yielded during consideration of the rule is for debate only.
General Leave
Mr. McGOVERN. Mr. Speaker, I also ask unanimous consent that all
Members be given 5 legislative days in which to revise and extend their
remarks on House Resolution 62.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from Massachusetts?
There was no objection.
Mr. McGOVERN. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, House Resolution 62 provides for further consideration
of H.R. 384, the Troubled Assets Recovery Program Reform Act of 2009
under a structured rule. The rule makes in order the 11 amendments
printed in the Rules Committee report, including a manager's amendment
that incorporated many of the amendments submitted to the Rules
Committee. All the amendments are debatable for 10 minutes except the
manager's amendment, which is debatable for 40 minutes.
The rule also provides for a motion to recommit with or without
instructions.
Finally, the rule contains a provision to preserve the House's
ability to have a vote on the second $350 billion. The first TARP bill
contained language providing for expedited consideration a disapproval
resolution that provided for a vote not later than 6 days after the
date Congress receives the report.
However, because President Bush sent the request to Congress on
January 12, the 6th day would fall on a Sunday, a day that the House is
not in session. Therefore, the ability to move to proceed would expire
without giving the House an opportunity to act. The language in this
rule assures that the House will have that opportunity.
Mr. Speaker, let me begin by saying that this is a good rule. Eleven
amendments are made in order--five Republican and six Democratic. One
of the Democratic amendments is the manager's amendment which
incorporates parts or all of the 16 Democratic amendments and
Republican amendments.
Mr. Speaker, as I discussed yesterday, this bill is about the way the
TARP should be spent, but it does not actually allow or preclude the
release of the second round of these funds.
Now, I know many of my colleagues are apprehensive about the release
of these funds. I understand their concerns, and I share some of them.
The Bush administration did not disburse the funds as many of us
thought they promised. I believe that this bill that we are debating
today and the amendments should alleviate many of these concerns.
I believe that providing a blueprint for how these funds should be
spent is one of the most important actions this Congress will take. We
know jump-starting our economy is a top priority of this new
administration and of this Congress. But we have to do it right. We
must ensure that the funding goes to the right places--to the
homeowners who face foreclosure, in many cases at no fault of their
own, and the small businesses who don't have access to funds for their
payrolls simply because the credit market is so tight.
This bill, Mr. Speaker, attempts to get it right. Not only does this
bill provide a blueprint on how this House believes these funds should
be spent; it complements the roadmap already provided by President-
elect Obama about how his administration would use these funds.
The January 12, 2009, letter from National Economic Adviser-designate
Larry Summers details how the incoming Obama administration will
allocate these funds, and I support these goals. But like I said
yesterday, Mr. Speaker, we will trust the new administration, but we
need to also verify.
This is a good bill that will be made better with the adoption of
many of the amendments made in order under this rule. I support this
rule, I support the underlying bill, and I urge my colleagues to
support both the rule and the bill.
I reserve the balance of my time.
Mr. DREIER. Mr. Speaker, I yield myself such time as I might consume.
(Mr. DREIER asked and was given permission to revise and extend his
remarks.)
[[Page H330]]
Mr. DREIER. Mr. Speaker, I want to begin by expressing my
appreciation to my good friend from Worcester, the distinguished vice
chairman of the Committee on Rules, Mr. McGovern, for yielding me the
time, the customary 30 minutes.
And I would also like to say in response to the exchange that Mr.
McGovern and I had yesterday, that I am more than willing and happy to
yield at any time if he asks me to yield to him during debate.
Yesterday, he was very reluctant to. One of the things that has
troubled me is that as we deal with this and other issues, people begin
with prepared statements, but as we get into a period of time during
which I believe this institution should have a free-flowing debate, the
option of yielding is one which should be taken up as much as possible.
That's my perspective, and I understand the right of individuals not to
yield, but I will say that I'm happy to yield to individuals at any
point.
At this point, I'm happy to yield to my distinguished friend.
Mr. McGOVERN. I thank the gentleman.
If I recall correctly, I did yield to the gentleman once. What I
objected to was being interrupted in mid-sentence. But I will be happy
to yield to the gentleman for a discourse at any time.
Thank you.
Mr. DREIER. If I can reclaim my time, I will simply say that I look
forward to yielding when we're having an exchange as we proceed with
the 111th Congress. And I always want to, as I believe this institution
deserves, to encourage a free-flowing debate on a wide range of issues.
Today actually, interestingly enough, Mr. Speaker, marks the first
time, the first time in the 111th Congress--and we've gone through
quite a bit of legislation in the last week--that we are not dealing
with a completely closed rule. But this process has been so utterly
flawed that this rule simply exposes just how far we have to go rather
than standing out as a step in the right direction.
The most serious problem is that the underlying bill is not a product
of any semblance of order whatsoever. No hearings, no testimony, no
markups. Now, anyone who looks at how a bill becomes a law, they
understand that the process of hearings, testimony, markup, that's all
part of the process. There has been absolutely no opportunity for any
of that. No opportunity for scrutiny whatsoever as this bill was
written.
This has continued into this amendment process. While I appreciate
the fact that the Democratic majority has actually considered
amendments for the first time, we're still left guessing as to what is
actually in this bill.
Most of the amendments that have been accepted will never even be
debated here on the House floor. They'll not be individually considered
in a transparent way. And one of the great statements of the many
statements made by President-elect Obama--and we all look forward in 5
days to his inauguration--is that he regularly talks about the need for
transparency. Well, a measure that we're about to consider under this
so-called manager's amendment will not allow the kind of transparency
that Mr. Obama believes should be the case.
These amendments were simply added en masse into this one amendment.
The point of considering amendments, Mr. Speaker, is not just to have
the opportunity to improve legislation. It is also meant to be an
opportunity for debate. It's a chance for Democratic and Republican
Members alike, not to mention the American people, to examine the key
components of a bill and have a real debate.
Unfortunately, this rule simply perpetuates a very flawed process,
protects a flawed bill, and prevents the real scrutiny that is very,
very deservant on the way in which this $350 billion, taxpayer dollars,
will be spent.
The Troubled Assets Recovery Program Reform Act, the so-called TARP,
has itself become quite troubled. As we've heard in yesterday's
discussion, we have serious concerns for how this program has been
implemented. We can't begin to consider the wisdom of releasing another
$350 billion until we understand how the initial money was used. And we
cannot begin to consider a bill to fix the system until we understand
what exactly this bill does. These are obligations we should take
seriously.
In the meantime, there are a number of far more limited and targeted
proposals that could easily be considered and enacted to address the
economic challenges we are facing.
Our colleagues on both sides of the aisle have proposed a number of
ideas for restoring our economy. They have suggested options that don't
pick winners and losers and don't ask the taxpayers to pay for an
unaccountable program.
{time} 1030
One proposal that I've advocated is a tax credit for new home
purchases that are made with a down payment of at least 5 percent.
The housing industry has been at the center of our economic crisis
from the beginning. It remains the core impediment to our economic
recovery. As home prices have fallen and foreclosures have risen, the
impact on working families has been enormous and the impact on our
economy has been, as we all know, very widespread. By encouraging and
enabling responsible home purchases, we can start to clear out the
excess supply in the housing market. This will help to stabilize
prices, prevent foreclosures, and put us back on a path to economic
recovery.
Now, I don't believe that this proposal that I've outlined and have
been talking about for the last couple of weeks is a panacea, but it is
a targeted measure that would help to address a key economic challenge
that we face.
Now, I would have offered my proposals and amendment to the
underlying bill, but it was not germane to the measure. But Mr.
Speaker, the point that I'm making is that there are many other
creative ideas out there that I believe should be given full
consideration. Unfortunately, we are spending our time on a bill that
its own author--I see the distinguished chairman of the Committee on
Financial Services has joined us here--has indicated will not be
enacted into law. The Democratic majority is merely concerned with
providing what I consider to be a fig leaf for the impending vote that
we're going to face to release this additional $350 billion.
The underlying bill will not safeguard the taxpayers' money and it
will not ensure that we have the proper tools to restore our economy. I
urge my colleagues to oppose this rule and the underlying legislation.
With that, I reserve the balance of my time.
Mr. McGOVERN. Mr. Speaker, I just want to set the record straight. It
is incorrect to say that there have been no hearings on this measure.
In fact, the Financial Services Committee on Tuesday held a hearing--I
think it began at around two o'clock in the afternoon and went into the
evening. So there has been a hearing in the committee of jurisdiction
on this.
At this time, I would like to yield 4 minutes to the gentleman from
Massachusetts (Mr. Frank).
Mr. FRANK of Massachusetts. I thank my colleague. And we've had
several hearings on this subject.
Again, the timetable here has been forced by the bill we adopted last
fall with the support of the Republican leadership and the President as
well as the Democratic leadership. And as a concession to Members, we
put in there that once the President asked for the second $350 billion
it would trigger a 15-day period in which we had to act. And we believe
it's important for the House to make clear what it wants to do here
during that period. But we've been having hearings on this since the
fall.
We put into the bill last fall some good oversight. The Government
Accountability Office put out a report last year very critical of the
failure to demand that the financial institutions that received funds
make clear what they were doing with them, and particularly to show to
what extent they were re-lending. That was because we put into the bill
that the GAO would be there from the first day in their offices. We had
a hearing with Mr. Kashkari, the Bush appointee to run the program, and
the GAO to deal with it. We had a further hearing on this subject in
the fall. We then had the long hearing that the gentleman from
Massachusetts talked about earlier this week to go into this in great
detail on Monday.
[[Page H331]]
We have invited all Members as of Friday to submit amendments. A
number of Members did so. In fact, I thank the Rules Committee; they
have put 10 amendments in order--one was a duplicate, so 10 are in
order, five from Republicans, five from Democrats. Of the Republican
amendments, I intend to vote for two; I intend to vote against three.
There were also amendments that we received from some Republicans that
we agreed to put in the manager's amendment.
The question is simply this, and it's two-fold: First, on the broader
question that's not before us today, do we deny to President Obama a
set of tools that this Congress voted for last fall because a great
majority of Members on both sides think that the Bush administration
used them poorly? If someone drives a car badly, do you sequester the
car and deny it to someone else who wants to drive it?
The TARP is not some living organism with a mind of its own. It is a
set of policy tools. A newly elected President has asked that he be
allowed to implement those tools. We say yes, but--and we are asking
for some serious commitments about how it's done. So that's the first
point.
The second point is that this money, whether or not it is spent, will
be in a separate vote. And the ranking Republican said yesterday, well,
let's wait for them to tell us how they plan to spend it. No, I don't
think we should do that. I think we should tell them how we want them
to spend it and see if they agree. And we have been having
conversations, and they do agree.
We are talking about subjects that have been very familiar to
Members. We are here trying to remedy defects in the Bush
administration's execution of this program--nothing for foreclosures,
not enough for community banks, no restrictions on what the banks that
receive the money use, tougher restrictions on compensation--though I
know not everybody agrees with that. The Wall Street Journal Editorial
Board--which I know represents the viewpoint of many on the Republican
side--was very critical today because we are asking that money be used
to reduce foreclosures; they say that's a waste of money. They were
scoffing, the Wall Street Journal--and again, I think that editorial
reflects some of the opposition we have here--they scoffed at the
notion that we want community banks to get some of the money. And they
said, how can you possibly want the money to go to nonfinancial
institutions? I guess the Wall Street Journal wants to be the ``Wall-
Street-Only Journal,'' and any effort to deal with small businesses or
automobiles, that's somehow a profanation of the temple as far as
they're concerned.
We have had serious discussions with the Obama administration. I
believe it is important that we do two things: First of all, give the
new President the right to spend the money; and, two, give him
restrictions on how he spends it.
Mr. DREIER. Mr. Speaker, I yield myself such time as I might consume.
And I would simply say to my colleague that we all recognize that there
is a pressing need out there, and the issue of foreclosures is one that
does need to be addressed. And I know that we had a discussion in the
Rules Committee the night before last on the issue of--and this is
prospective, as I had said earlier--but this notion of trying to
encourage people, prospective homebuyers, to buy up that surplus of
housing out there by incentivizing them to put a down payment. Now, I
know that this is an issue that transcends what we're dealing with
today--
Mr. FRANK of Massachusetts. Would the gentleman yield?
Mr. DREIER. I'm happy to yield to my friend.
Mr. FRANK of Massachusetts. I think there is a lot to be said, but it
is, of course, entirely outside the jurisdiction of the Financial
Services Committee.
Mr. DREIER. Absolutely. If I could reclaim my time, I will say that I
know that it is outside the jurisdiction of the Financial Services
Committee, but I think it is very important for us to do everything
that we can to look at a broad range of creative proposals to try and
deal with this crisis.
And I am happy to further yield to my friend.
Mr. FRANK of Massachusetts. I thank the gentleman. And I agree with
that. And housing has been at the center. I would note--and it's not
directly relevant, and may, in fact, support this other proposal--but I
would note that the homebuilders and the realtors strongly support the
bill we are talking about today because they think it helps in other
ways. It does not preempt what the gentleman from California is talking
about, but those people who are most concerned with the housing
industry support the bill and think it will be helpful.
Mr. DREIER. I understand that. And let me reclaim my time, Mr.
Speaker, and say that even though it does not fall within the
jurisdiction of the Financial Services Committee, this kind of proposal
is something that I would like to work with my colleague on and others
on as a way to deal with the challenge of this huge supply of housing
that exists in my State of California and in other States as well. And
the fact that, unfortunately, over the past several years we have seen
a wide range of people treating homes that they have purchased like
rental units because they put zero down and have very low interest
payments, and so they're encouraged to walk away from it, our proposal
here is one that is designed to ensure that people actually have a
vested interest in that home.
And with that, I'm happy to yield 2 minutes to my very good friend
from Hayes, Kansas (Mr. Moran).
Mr. MORAN of Kansas. I thank the gentleman from California for
yielding.
I am here about a specific provision that was initially in the
legislation that we are going to address today. In fact, I came to that
realization over the weekend and I contacted the gentleman from
Massachusetts (Mr. Frank), who was kind enough to return my phone call
this past weekend. And as a result of an effort by many in this
Congress, this provision has been removed. And I am here to commend the
gentleman from Massachusetts and my colleagues on the Rules Committee
for making in order a manager's amendment that will eliminate a
provision that denies the opportunity for those who receive funds under
TARP from owning general aviation aircraft.
Mr. FRANK of Massachusetts. Would the gentleman yield?
Mr. MORAN of Kansas. I have very little time, but I would yield.
Mr. FRANK of Massachusetts. I just want to congratulate him and his
fellow Kansans and others who brought this to our attention.
And let's make one thing clear; we recently read--I did--in the New
York Times about smaller communities that have lost commercial air
service. To tell a business which is located in a community that has
lost commercial air service that it can never charter or buy a plane is
really to invite them to leave those communities. So it is not simply
the airline industry that's involved here, but it is economic fairness
for small communities where businesses located there would have no
other option if they aren't allowed to go to private aircraft.
Mr. MORAN of Kansas. Reclaiming my time. Again, I appreciate it for
two reasons; a person who represents very rural America where air
service is very limited, and someone who is from Kansas that represents
the general aviation industry, which is very dominant. We are very
appreciative of the fact that the provisions which would reduce
employment in the aircraft industry and eliminate the opportunities for
businesses to remain in rural America is stricken from this legislation
in the manager's amendment.
Mr. McGOVERN. I yield 3 minutes to the gentleman from California (Mr.
Sherman).
Mr. SHERMAN. I thank the gentleman for yielding.
The bill is good as far as it goes, but before Congress thinks that
we're done with the TARP program, we ought to be considering
legislation to make it stronger and to provide additional limits.
First, and most important, we need to prohibit those companies that
receive funds under this program from then paying dividends to their
existing common shareholders or using their money to go buy the shares
held by their existing shareholders. Why are we putting capital in if
the company is then taking the capital out, and giving it to its
existing shareholders? That needs to be prohibited by statute. At a
minimum, I hope we get an unequivocal letter from the incoming
administration that they will prevent such
[[Page H332]]
transfers by regulation, and through other means.
Second, we need to make sure that if assets are purchased from the
banks that were buying bad bonds, that such bonds were owned by
American entities, including those with foreign parents, and that these
bonds were owned by American entities on September 20, 2008, which is
when the whole dam broke. What we don't want to do is see these monies
go to buy bad bonds that were bad investments made in Shanghai and
Riyadh and London.
Third, this bill under consideration, and the TARP bill, allows for
Million-Dollar-a-Month salaries. We cannot go to the American people
and say we have limited executive compensation except for the most
common element of executive compensation, salaries. There ought to be a
limit--and only on those companies, of course, that are holding
taxpayer money. I say to those banks that want to pay more than a
million a year, the banks that want to pay more than a million a month
to some of their executives and say, fine, give us back the money
first.
And finally, as to perks, one thing that the American people have
focused on is the use of private executive jets. This bill says you
cannot use those--you can't own them or lease them, at least--if your
company is based in Detroit. But if you're a Wall Street bank, buy,
lease, fly whatever you want. That is a strange anti-Detroit dichotomy.
Why should we prohibit these luxury jets? Because we want them to give
us the money back. We don't want every executive on Wall Street to come
and take the TARP money and hold on to it as long as possible.
Second, we want to encourage jobs in the commercial aircraft
industry, both the manufacture and operation of those Boeing jets and
United and American Airlines. And finally, because when the banks spend
the money on ridiculous perks, whether it be extreme limos or extreme
jets, that's money they can't lend to businesses in our districts.
Mr. DREIER. Mr. Speaker, at this time I am happy to yield 3 minutes
to our very diligent former Rules Committee member, the gentleman from
Marietta, Georgia (Mr. Gingrey).
Mr. GINGREY of Georgia. I thank the gentleman for yielding.
I rise in opposition to this rule, which denies Members of this House
an opportunity to have their amendments openly debated and given an up-
or-down vote.
The amendment which I offered, which was not made in order, would
have very simply prohibited any additional budget authority for the
TARP program unless at least 30 percent of the final $350 billion
tranche is used to assist smaller, local community financial
institutions. The 30 percent floor reflects the fact that approximately
30 percent of our Nation's deposits are held in these institutions,
some 7,000 of them across the country.
Mr. Speaker, without question, these smaller institutions are
suffering on the front lines of a crisis that they did not create.
However, they are uniquely positioned to help provide much-needed
credit access to ordinary citizens looking to buy a car or buy a home
or invest in a small business.
Allow me to give an example. With every dollar in new capital a
community bank can raise, it will help facilitate an additional $7 to
$10 of lending in their communities. So by guaranteeing an appropriate
portion of TARP authority to community institutions, we can better
ensure this capital will indeed be put to good use.
{time} 1045
Mr. Speaker, when Congress first considered the economic
stabilization package last fall, the most severe threat presented to us
was across-the-board credit freeze that would have stopped all
financial activity in its tracks. Well, we may have avoided a
catastrophe on Wall Street, but now is the time to encourage lending
and capital on Main Street. And while I am pleased to see the
underlying bill recognizes that community financial institutions,
including those that are privately thinly held or subchapter S should
have are the same level of access to the program as larger
institutions, H.R. 384 does not go far enough. We must address the
current crisis from a systemic perspective, and my amendment, I
believe, would have fostered meaningful participation from the smaller
financial institutions which, after all, Mr. Speaker, are vital to the
economic recovery of our Nation, our States, our congressional
districts. They are the lifeblood.
I ask my colleagues to oppose the rule.
Mr. McGOVERN. Mr. Speaker, I have no further requests for time.
Mr. DREIER. Will the gentleman yield so I might engage in a colloquy?
Mr. McGOVERN. I would be happy to yield to the gentleman.
Mr. DREIER. I thank my friend for yielding.
Mr. Speaker, let me say that last night in the Rules Committee as
this rule came forward, there was some concern voiced as to whether or
not this rule may in some way preempt the opportunity for Members to,
in fact, offer a resolution of disapproval to deal with this.
Section 2 of the rule relates to the consideration of the resolution
to disapprove the last $350 billion of TARP funds. Subsection b permits
a Member to make a privileged motion to proceed on Wednesday, January
22, when it would normally only be available this coming Sunday.
However, subsection a limits the motion to the majority leader rather
than any Member.
I just want to confirm again with the gentleman from Massachusetts,
just as we did last night in the Rules Committee, that the purpose of
this provision is only, only to allow the majority leader to manage the
day's schedule and will not in any way be used to deny Members an up-
or-down vote on releasing the remaining TARP funds.
And I thank my friend for yielding to me for the question and if he'd
like to respond.
Mr. McGOVERN. The gentleman is correct.
Mr. DREIER. Correct. Okay. I thank my friend for yielding on that.
Mr. McGOVERN. Mr. Speaker, I reserve the balance of my time.
Mr. DREIER. Mr. Speaker, I would like to yield 1 minute to a very,
very hardworking Member, a very senior Member from Indianapolis,
Indiana (Mr. Burton).
Mr. BURTON of Indiana. I thank the gentleman for yielding.
What does that mean, a ``senior Member''? I hope it doesn't mean I
look old.
Mr. DREIER. If the gentleman would yield, he's one term less senior
than I.
Mr. BURTON of Indiana. All right.
Mr. Speaker, let me just say that Everett Dirksen, when he was a
United States Senator, said, a billion here, a billion there, and
you're really talking about money, real money. Now it's a trillion
here, a trillion there, and you're talking about real money. The only
problem is the American people are going to face hyperinflation down
the road if we continue down this path.
Today we are talking about an additional $350 billion, and we don't
even know where the first $350 billion of the bailout was spent. It
makes no sense to me to be voting for this today when we really don't
have any accountability for the first tranche, the $350 billion that
has already been allocated.
People in the stock market are taking a real bath. People who have
investments, their life investments, in the stock market are taking a
real bath. People who are going to retire or are already retired are
taking a real bath.
The SPEAKER pro tempore. The time of the gentleman has expired.
Mr. DREIER. Mr. Speaker, at this time I am happy to yield to my
friend from Indianapolis an additional 1 minute.
Mr. BURTON of Indiana. Mr. Speaker, it seems to me that the people
who are having trouble in the stock market ought to start looking at
places to invest like the ink that's being sold to the U.S. Treasury or
the paper that's being sold to the U.S. Treasury that's going to be
used to print more and more and more money.
I don't want to take the whole extra minute my colleague has
allocated to me, and I really appreciate it, but I would like to say if
I were talking to the President or the American people that we have to
control spending in this place. We have to control spending. If we
don't do that, we're going to see very high inflation which will be
followed by very high interest rates, will put a real kibosh and a
rubber band effect on our economy. The way to solve this problem is to
give the American people some of their money
[[Page H333]]
back with tax cuts and to cut capital gains.
So I would like to end up by just saying let's be more concerned
about spending around here. Let's really start thinking about it. It's
the people's money. The taxpayers want accountability.
Mr. McGOVERN. Mr. Speaker, I yield myself such time as I may consume.
I would just respond to the gentleman by saying that what we are
debating today is not about releasing money. There's no money attached
to this bill. In fact, all this bill does really is set conditions on
any money that may or may not be released. This bill also preserves
this Chamber's right to have a vote on the release of the next TARP
tranche.
Mr. DREIER. Will the gentleman yield?
Mr. McGOVERN. I yield to the gentleman.
Mr. DREIER. I thank my friend for yielding.
And I have got to say that the notion that somehow the measure that
we're trying to consider here today is not related to this idea of
releasing, within this 15-day period, the additional $350 billion is
preposterous. It's clear that it's tied together.
Mr. McGOVERN. Mr. Speaker, reclaiming my time, I thank the gentleman
for his observation, but I didn't say that it was not related. The
gentleman was talking about this bill as if today we're releasing this
money.
What this bill does is set conditions. It makes it clear what
Congress' intention is on how that money should be spent if it should
be released. If the gentleman or anybody else in this Chamber wants to
vote against releasing additional money, they will have that
opportunity at a later date.
Mr. Speaker, I reserve the balance of my time.
Mr. DREIER. Mr. Speaker, at this time I am happy to yield 5 minutes
to our friend from Columbus, Indiana, the distinguished chairman of the
Republican Conference (Mr. Pence).
(Mr. PENCE asked and was given permission to revise and extend his
remarks.)
Mr. PENCE. Mr. Speaker, I rise in opposition to the rule.
Mr. Speaker, we are in a recession. Many American families are
hurting. Many millions more worry that they'll lose their job next. And
it is important that this Congress, in legislation before us today, in
the related legislation and in upcoming bills, take action. Inaction is
not an option. But more important than just doing something, it is
imperative that Congress, on behalf of the American people, do the
right thing. And I rise today to say from my heart that the American
people know we cannot borrow and spend and bail our way back to a
growing economy.
This legislation, related as it is to the second half of the banking
bailout that passed the Congress last fall, is the wrong approach. I
opposed that legislation last fall both times it came up because I
believe that economic freedom means the freedom to succeed and the
freedom to fail. The decision that Congress made to give the Federal
Government the ability to nationalize almost every bad mortgage in
America interrupted this basic truth. There were no easy answers at the
time. But the American people deserved to know then and deserve to know
now there are alternatives to massive government spending and bailouts.
We come today to consider legislation that, as the gentleman just
stated, is preamble, if you will, to the TARP vote that may or may not
come to this body, and I acknowledge that. But the truth is that it is
all interrelated. And Congress and this body may soon be asked to
approve and police the second $350 billion installment to the financial
markets in this country approved last fall, and we will be asked to do
so under a new set of promises from a Congress in this legislation and
a President, neither of which's sincerity do we question on this floor
today, but it's a set of promises about oversight and promises that
we'll spend the money better, and I rise today to say that there is
just simply a better way.
Taxpayers should not be asked to pay another $350 billion for a
bailout that could be disbursed far beyond the original authorization
of this Congress to undetermined industries in ways that we have seen
used already for the initial tranche of this bill. House Republicans
believe that enough is enough. We believe, as most Americans do, that
we cannot borrow and spend and bail our way back to a growing economy.
The real answer that House Republicans embrace, and I believe that it
is an answer that most Americans embrace, is that it is time for us to
put the American taxpayer first. It's time for us to say ``no'' to more
bailouts, however well additionally supervised, no more bailouts, no
more excessive government spending. It's time this Congress began to
reduce the burden of taxes on working families, small businesses, and
family farms and began to practice the kind of fiscal discipline that
the American people expect.
So I rise today in opposition to this rule and the underlying bill.
And however well-intentioned, I believe it is, in effect, only preamble
to legislation that could come to this floor that would be the wrong
decision for the American people. The American people want us to walk
away from the politics of bailouts, and they want us to take this
country in the direction where we're not releasing the power of the
Treasury to solve our very real economic woes but we are passing the
kind of tax relief that will release the resources, the genius, the
courage, and the ingenuity of the American people. As President John F.
Kennedy said, all ships will then rise on a rising tide.
Mr. McGOVERN. Mr. Speaker, I have no further requests for time, and I
reserve the balance of my time.
Mr. DREIER. Mr. Speaker, I yield myself such time as I might consume
simply to rise and compliment my friend from Columbus, our Republican
Conference Chair, for his very thoughtful remarks on this issue. And I
hope very much that we will be able to proceed with a strong and
rigorous debate.
Unfortunately, Mr. Speaker, this rule does not allow us to have the
kind of debate that I think this institution or the American people
deserve, and I say that again reminding our friends that the so-called
manager's amendment takes a huge package of amendments and does not
allow the kind of transparency about which Mr. Obama has spoken because
we won't have time to debate them. I guess there's, what, 40 minutes
debate, 20 minutes on each side, to discuss all of the amendments that
have been made in order and is I do not believe an adequate amount of
time for us to go through the kind of detail that I think the American
people deserve and that Members of this institution deserve.
Mr. Speaker, I will say I have been waiting patiently for one of our
colleagues; so I just want him to know that I made an attempt to yield
time to him. His name will not be mentioned at this point for fear that
anyone might think that he was being derelict in his duties. I'm sure
he is very, very busy.
Let me say that we are proceeding on an issue which I don't believe
we should be dealing with at this moment. The reason I say that is that
we have not had adequate hearings, we have not had adequate
deliberation on this question, and there is acknowledgment from our
friend the Chair of the Committee on Financial Services that the
measure that we will be proceeding with will never become public law.
It is being used as a consultative tool with the incoming
administration. Needless to say, this is a somewhat unusual procedure
that the House is going to deal with an issue that is not going to
become public law, and as the House is looking at this, discussions are
taking place with the administration.
{time} 1100
It is unusual, to say the least. Now, I recognize that we are in near
unprecedented times, and we need to deal responsibly with the economic
downturn through which the United States of America and the world is
now going. But I don't believe that we should be casting aside our
responsibility as Members of this institution to do the right thing.
I think that the right thing for us is to actually spend the time and
effort looking at creative solutions. At this moment, there is a
hearing taking place among our Republican economic stimulus group. I
was there earlier this morning. We have a couple of very thoughtful
witnesses who I suspect are still testifying. The former Governor of
Massachusetts and Presidential candidate, Mitt Romney; the former
president and CEO of eBay, Meg Whitman,
[[Page H334]]
were testifying just as I was leaving, and there are several other
witnesses coming before this working group of which I am privileged to
be a part.
There are lots of ideas that are coming to that hearing, not just
from the witnesses, Mr. Speaker, but from the American people as well.
Those are actually being voiced at that hearing.
So here we are, I believe, rushing ahead with legislation that is not
going to become law and, quite possibly, allowing an additional $350
billion to be expended on this very, very troubled, troubled asset
relief plan. I, for one, believe it is wrong for us to do it as we are
doing it.
So, Mr. Speaker, I urge my colleagues to vote ``no'' on this rule and
to vote ``no'' on the underlying legislation.
With that, I yield back the balance of my time.
Mr. McGOVERN. Mr. Speaker, the Bush economic policies over the 8
years have been a failure. They have been a miserable failure. We have
an incredibly high number of people who have lost their jobs. December
marked the second highest number of foreclosures in the history of the
United States of America. We have the highest deficit and the highest
debt in the history of our country.
Unless we do something, something big and something bold, the economy
will get worse. We have the worst economy since the Great Depression.
People don't want to hear anymore speeches. People don't want to hear
anymore excuses. The people of this country don't want us to stand on
the House floor and say we feel your pain.
What people want is action and people want smart, bold, big,
effective action by this Congress. What we are doing here today is
trying to put forward in blueprint so if, in fact, anymore money is
going to be released as part of the TARP, that it is clear where that
money will be spent. We are not content to just take the next
administrations at their word.
We want to make it very clear where Congress stands. This is a chance
for people to decide. If you are for foreclosure relief, then you
should be supporting the bill that Chairman Frank has put forward. If
that's not important to you, then you can vote ``no.'' If you want
accountability, then you should support this bill. If that's not
important, then put it aside.
If you think that the United States House of Representatives should
have a say in how this money is spent, then I think you should support
this bill. If not, then fine. You don't have to support it.
Mr. DREIER. Will the gentleman yield?
Mr. McGOVERN. I am happy to yield to the gentleman from California.
Mr. DREIER. I thank my friend for yielding.
Mr. Speaker, I would just like to say the gentleman we were waiting
for earlier has arrived. I was wondering if I might reclaim a little of
my time and allow my friend to offer his remarks.
Mr. McGOVERN. I have no objection to that.
The SPEAKER pro tempore. Without objection, the gentleman is
recognized.
There was no objection.
Mr. DREIER. So the gentleman will be able to continue his very
brilliant closing statement.
Mr. McGOVERN. Why don't I reserve my final close and let you yield.
Mr. DREIER. Brilliant idea.
At this time, Mr. Speaker, I would be very, very happy to yield 2
minutes to my friend from Palm Harbor, Florida (Mr. Bilirakis).
Mr. BILIRAKIS. I thank the gentleman for yielding.
Mr. Speaker, I rise in opposition to this restrictive rule. The last
Congress approved transferring $350 billion of this Nation's wealth to
Wall Street with little transparency, less accountability and, worst of
all, with no real effect on our failing economy.
Many of our constituents are opposed to the use of the money to bail
out Wall Street. Some of them are so angry at Congress they no longer
trust anyone in government.
I submitted an amendment to the Rules Committee that would have
required institutions receiving bailout funds to disclose the
compensation of their highest-paid executives and directed the Treasury
Department to maintain a searchable database of that information.
Unfortunately, my amendment was made out of order. This Congress is
entrusting $700 billion of taxpayers' moneys to executives on Wall
Street, and yet Congress won't even require those same executives to
disclose what they are paying themselves.
I believe we need this information to help us make informed decisions
about the use of taxpayers' money to help the people and companies that
greatly contributed to our current economic crisis. Our constituents
deserve to know how those to whom we have given their money are using
it. If Congress fails to insist on at least the most basic mechanisms
of transparency while handing billions to Wall Street, we will have
victimized the American people and done irreparable harm to the
reputation of this institution.
I hope in the future the majority heeds our incoming President's call
for bipartisanship in this body and openness in government, goals
towards which my amendment would have made progress.
Mr. DREIER. Mr. Speaker, I yield myself the balance of our time, and
the gentleman from Massachusetts is going to offer his closing
statements then.
I would just like to take a moment if I might, Mr. Speaker. The
distinguished chairman of the Financial Services Committee, Mr. Frank,
as he reminded us in the Rules Committee the day before yesterday, and
I came to Congress in 1980. We did so at a very challenging economic
time for the United States.
I would like to remind our colleagues that Ronald Reagan was elected
President the same day that Mr. Frank and I were elected to serve in
the House of Representatives. At that time we were dealing with double-
digit unemployment, interest rates that were well into double digits
and economic news that was, in fact, very, very dire.
Now, I am no way diminishing, diminishing, the seriousness of the
economic challenges that we face today, but I think that it is very
important for us to note that the economy that Ronald Reagan inherited,
when some of us first arrived here, was, in fact, in a more serious and
dire circumstance than we face today. The reason I say that is that it
has become a standard line over the last week or two to say that we
are, in fact, in the most serious economic time since the Great
Depression.
Now, I hope and pray that that is not the case, but, again, if we
look at simply the numbers that existed in the early part of the 1980s,
when Mr. Frank and I arrived here in the Congress, to what they are
today, we still have a lot of work to do, but I believe that Ronald
Reagan faced more serious challenges than we face now.
Now, I will say that I don't know what tomorrow is going to bring. No
one knows what tomorrow is going to bring, but I believe that the
solutions that we put into place in the early 1980s were, in fact, very
positive ones, which brought about marginal rate reduction, which
increased by $1 trillion the flow of revenues to the Federal Treasury
through the 1980s. And, yes, we did see an increase in the size of the
Federal deficit.
This Congress ended up spending an awful lot more money than had been
anticipated or than Ronald Reagan or some of the rest of us would have
wanted. We also know that there was a dramatic buildup in defense
spending that took place during the 1980s, and I believe at this
juncture we have seen the great benefit of that.
In fact, this year we marked the very important 20th anniversary of
many, many, many of the great accomplishments that came from what
Ronald Reagan did during the 1980s.
Mr. FRANK of Massachusetts. Will the gentleman yield?
Mr. DREIER. Of course, I am happy to yield to my friend, the
distinguished Chair of the Committee on Financial Services.
Mr. FRANK of Massachusetts. He says that Ronald Reagan didn't like
the spending of the Congress during his administration. Of course, for
6 of those 8 years he had a Republican Senate, but the point is, if he
didn't like it, he exercised great self-restraint because he never
vetoed one of those spending bills that he apparently didn't like.
Mr. DREIER. Well, if I could reclaim my time, I would say that Ronald
Reagan did not like a lot of that spending. Maybe he tolerated some of
that spending, is what I might acknowledge.
[[Page H335]]
But the fact is there was more spending than Ronald Reagan or any of
the rest of us would have liked in the 1980s on a wide range of
programs, but I did acknowledge the dramatic increase in defense
spending. Again, this year, 2009, marks the 20th anniversary of the
crumbling of the Berlin Wall and dramatic changes that took place in
Asia, Africa, Europe that I think need to be realized that came from
that very, very difficult economic challenge that Ronald Reagan
inherited in 1981.
So I would say, Mr. Speaker, that I think it's important for us to
use the kinds of solutions that worked in the early 1980s, if we can.
All I am arguing, as we look at the debate on this rule and the
underlying legislation that, we, unfortunately, are not turning to
those very thoughtful time tested alternatives.
It's for that reason that I urge my colleagues to vote ``no'' on this
rule and on the underlying legislation. I appreciate my colleagues
allowing our friend from Florida to have the chance to speak.
I yield back the balance of my time.
Mr. McGOVERN. Mr. Speaker, I just want to close by saying that I
appreciate the history lesson on Ronald Reagan and the Berlin Wall and
all the other things that were mentioned.
But the harsh reality is that people are suffering. As we speak,
people are losing their homes. The foreclosure numbers in December were
the second highest, were the second highest in the history of this
country. People need help now. We need to do something now.
So the point of this legislation is to help provide a blueprint for
this new administration which has already outlined similar views but to
basically reinforce what they have said they want to do, to help
provide foreclosure relief, more accountability, to be able to help
small businesses get the credit they need, so they can employ more
people. We need to get this economy on the right track, and Congress
should have a say in it.
So I would urge my colleagues to vote ``yes'' on the underlying bill
and I would urge them to vote ``yes'' on the bill. I urge a ``yes''
vote on the previous question.
Ms JACKSON-LEE of Texas. Thank you, Mr. Speaker, for affording me
this opportunity to address H. Res. 62, the rule providing for
consideration of H.R. 384, the TARP Reform and Accountability Act of
2009. I believe the rule can be supported by every Member of the House.
Mr. Speaker, I was pleased to work with Chairman Frank and his staff
on significant portions of this Manager's Amendment to ensure that
small and minority businesses along with local, community, and private
banks gain fair and equitable access to the TARP funds. Small
businesses are the backbone of our Nation, and unfortunately, they have
not been afforded the opportunity that large financial institutions
have received to TARP funds and loans. With the ever worsening economic
crisis, we must ensure in this legislation that small and minority
businesses and community banks are afforded an opportunity to benefit
from this important legislation. I am very pleased that this Manager's
Amendment does just this.
This bill will amend the TARP provisions of the Emergency Economic
Stabilization Act of 2008 (EESA) to strengthen accountability, close
loopholes, increase transparency, and most importantly, require the
Treasury Department to take significant steps on foreclosure
mitigation. Mr. Speaker, I was particularly pleased to work with
Chairman Frank and his staff on significant portions of the Manager's
Amendment to this legislation which ensures that small and minority
businesses along with local, community, and private banks gain fair and
equitable access to the TARP funds.
It's been 3 months since the Treasury started disbursing TARP funds.
Just in time perhaps for a lot of big banks, however smaller banks have
been locked out so far. A lot of small banks certainly are in need of
relief as the real estate crisis continues to unfold and hundreds have
already applied.
According to recent reports, the Treasury Department has yet to issue
``the necessary guidelines for about 3,000 additional private banks.
Most of them are set up as partnerships, with no more than 100
shareholders. They are not able to issue preferred shares to the
government in exchange for capital injections, as other banks can.''
While Treasury officials state they are ``working on a solution,'' for
these private banks time is of the essence.
The Treasury Department has handed out more than $155 billion to 77
banks. Of that sum, $115 billion has gone to the eight largest banks.
Community banks hold 11 percent of the industry's total assets and play
a vital role in small business and agriculture lending. Community banks
provide 29 percent of small commercial and industrial loans, 40 percent
of small commercial real estate loans and 77 percent of small
agricultural production loans.
Specifically, I worked with Chairman Frank on the language in the
Manager's Amendment. In Section 107, the Manager's Amendment creates an
Office of Minority and Women Inclusion, which will be responsible for
developing and implementing standards and procedures to ensure the
inclusion and utilization of minority and women-owned businesses. These
businesses will include financial institutions, investment banking
firms, mortgage banking firms, broker-dealers, accountants, and
consultants. Furthermore, the inclusion of these businesses should be
at all levels, including procurement, insurance, and all types of
contracts such as the issuance or guarantee of debt, equity, or
mortgage-related securities. This office will also be responsible for
diversity in the management, employment, and business activities of the
TARP, including the management of mortgage and securities portfolios,
making of equity investments, the sale and servicing of mortgage loans,
and the implementation of its affordable housing programs and
initiatives.
Section 107 also calls for the Secretary of the Treasury to report to
Congress in 180 days detailed information describing the actions taken
by the Office of Minority and Women Inclusion, which will include a
statement of the total amounts provided under TARP to small, minority,
and women-owned businesses. The Manager's Amendment in Section 404 also
has clarifying language ensuring that the Secretary has authority to
support the availability of small business loans and loans to minority
and disadvantaged businesses. This will be critical to ensuring that
small and minority businesses have access to loans, financing, and
purchase of asset-backed securities directly through the Treasury
Department or the Federal Reserve.
Mr. Speaker, and I urge my colleagues to support this rule.
Mr. McGOVERN. Mr. Speaker, I yield back the balance of my time, and I
move the previous question on the resolution.
The previous question was ordered.
The resolution was agreed to.
A motion to reconsider was laid on the table.
The SPEAKER pro tempore. Pursuant to House Resolution 62 and rule
XVIII, the Chair declares the House in the Committee of the Whole House
on the state of the Union for the further consideration of the bill,
H.R. 384.
{time} 1113
In the Committee of the Whole
Accordingly, the House resolved itself into the Committee of the
Whole House on the State of the Union for the further consideration of
the bill (H.R. 384) to reform the Troubled Assets Relief Program of the
Secretary of the Treasury and ensure accountability under such Program,
and for other purposes, with Mr. Ross (Acting Chair) in the chair.
The Clerk read the title of the bill.
The Acting CHAIR. When the Committee of the Whole House rose on
Wednesday, January 14, 2009, all time for general debate, pursuant to
House Resolution 53, had expired.
Pursuant to House Resolution 62, no further general debate is in
order, and the bill shall be considered read for amendment under the 5-
minute rule.
The text of the bill is, as follows:
H.R. 384
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``TARP
Reform and Accountability Act of 2009''.
(b) Table of Contents.--The table of contents for this Act
is as follows:
Sec. 1. Short title; table of contents.
TITLE I--MODIFICATIONS TO TARP AND TARP OVERSIGHT
Sec. 101. New conditionality for TARP-assisted institutions.
Sec. 102. Executive compensation and corporate governance.
Sec. 103. New lending by insured depository institutions that is
attributable to TARP investments and assistance.
Sec. 104. Other protections for the taxpayer.
Sec. 105. Availability of TARP funds to smaller community institutions.
Sec. 106. Increase in size and authority of Financial Stability
Oversight Board.
Sec. 107. Clarification.
TITLE II--FORECLOSURE RELIEF
Sec. 201. TARP foreclosure mitigation plan and implementation.
[[Page H336]]
Sec. 202. Elements of plan.
Sec. 203. Program alternatives.
Sec. 204. Systematic foreclosure prevention and mortgage modification
plan established.
Sec. 204. Modification of plan.
Sec. 205. Servicer safe harbor.
Sec. 206. Report by Congressional Oversight Panel.
TITLE III--AUTO INDUSTRY FINANCING AND RESTRUCTURING
Sec. 301. Short title.
Sec. 302. Direct loan provisions.
TITLE IV--CLARIFICATION OF AUTHORITY
Sec. 401. Consumer loans.
Sec. 402. Municipal securities.
Sec. 403. Commercial real estate loans.
TITLE V--HOPE FOR HOMEOWNERS PROGRAM IMPROVEMENTS
Sec. 501. Changes to HOPE for Homeowners Program.
Sec. 502. Funding of increased HOPE for Homeowners Program credit
subsidy costs.
TITLE VI--HOME BUYER STIMULUS
Sec. 601. Home buyer stimulus program.
TITLE VII--FDIC PROVISIONS
Sec. 701. Permanent increase in deposit insurance.
Sec. 702. Extension of restoration plan period.
Sec. 703. Borrowing authority.
Sec. 704. Systemic risk special assessments.
TITLE I--MODIFICATIONS TO TARP AND TARP OVERSIGHT
SEC. 101. NEW CONDITIONALITY FOR TARP-ASSISTED INSTITUTIONS.
(a) In General.--Section 113 of the Emergency Economic
Stabilization Act of 2008 (12 U.S.C. 5223) is amended by
adding at the end the following new subsections:
``(e) Reporting, Monitoring and Accountability.--
``(1) Periodic public reporting on use of assistance.--The
Secretary shall require any assisted institution that became
an assisted institution on or after October 3, 2008, to
publicly report, not less than quarterly, on such
institution's use of the assistance .
``(2) Additional requirements and compliance.--The
Secretary--
``(A) may establish additional reporting and information
requirements for any direct or indirect recipient of any
assistance or benefit at any time on or after October 3,
2008, that involves the obligation or expenditure, loan, or
investment of funds available to the Secretary under this
title; and
``(B) shall establish appropriate mechanisms to ensure
appropriate use and compliance with all terms of any use of
funds made available under this title.
``(3) Consultation.--The Secretary shall consult with the
appropriate Federal banking agencies in establishing the
reporting requirements under this subsection that are
applicable to insured depository institutions.
``(f) Use and Accountability for Use of Funds.--
``(1) Insured depository institution.--
``(A) Investment in or other injection of funds into a
depository institution.--As a condition for the provision of
any investment in the capital or assets of, or any other
provision of assistance to or for the benefit of, any insured
depository institution, the Secretary shall incorporate into
the agreement for such investment or assistance an agreement
between the depository institution and the appropriate
Federal banking agency with respect to such institution on
the manner in which the funds are to be used and benchmarks
that the institution is required to meet in using the funding
so as to advance the purposes of this Act to strengthen the
soundness of the financial system and the availability of
credit to the economy.
``(B) Examinations.--In the case of any assisted insured
depository institution that became an assisted institution on
or after October 3, 2008, the appropriate Federal banking
agency shall specifically review at least once annually the
use, by the institution, of funds made available under this
Act and compliance by the institution with the requirements
established by or pursuant to this title or by agreement of
the institution with the Secretary or the appropriate Federal
banking agency, including executive compensation and any
other specific agreement terms. Such review may be conducted
in connection with the regular full-site examination, or any
other examination.
``(C) Compliance procedures required.--Each appropriate
Federal banking agency shall prescribe regulations requiring
assisted insured depository institutions to establish and
maintain procedures designed to assure and monitor the
compliance of such depository institutions with the
requirements established by or pursuant to this title or by
agreement of the institution with the Secretary or such
agency.
``(2) Use of tarp funds for mergers or acquisitions.--
Effective as of the date of the enactment of the TARP Reform
and Accountability Act of 2009, no assisted institution that
became an assisted institution at any time on or after
October 3, 2008, may merge or consolidate with any insured
depository institution or, either directly or indirectly,
acquire the assets of, or assume liability to pay any
deposits made in, any insured depository institution, and no
Federal banking agency may approve any such action under
section 18(c) of the Federal Deposit Insurance Act, while any
of such assistance is outstanding unless, prior to the
approval of such agency, the Secretary has determined in
consultation with any relevant Federal banking agencies
that--
``(A) such action will reduce risk to the taxpayer; or
``(B) the transaction could have been consummated without
funds provided under this title.
``(3) Nondepository institutions.--In the case of any
assisted institution that became an assisted institution on
or after October 3, 2008, and is not described in and subject
to paragraph (1), the Secretary shall establish such
reporting requirements and require any other conditions or
agreements no less stringent than those applicable to
assisted insured depository institutions, including
requirements to conduct examinations of the books, affairs,
and procedures of any such financial institution by the
Secretary or by delegation to the Board.
``(g) No Impediment to Withdrawal.--Subject to consultation
with the appropriate Federal banking agencies, the Secretary
may permit an insured depository institution to repay any
assistance previously provided under this title to such
depository institution without regard to whether the
depository institution has replaced such funds from any other
source.''.
(b) Definitions.--Section 3 of the Emergency Economic
Stabilization Act of 2008 (12 U.S.C. 5202) is amended by
adding at the end the following new paragraphs:
``(10) Definitions relating to insured depository
institutions.--The terms `depository institution', `insured
depository institution', `Federal banking agency' and
`appropriate Federal banking agency' have the same meanings
as in section 3 of the Federal Deposit Insurance Act.
``(11) Assisted institution.--The terms `assisted
institution' or `assisted insured depository institution'
means any such institution that receives, directly or
indirectly, any assistance or benefit that involves the
obligation or expenditure, loan, or investment of funds
available to the Secretary under title I.''.
SEC. 102. EXECUTIVE COMPENSATION AND CORPORATE GOVERNANCE.
(a) In General.--Section 111 of the Emergency Economic
Stabilization Act of 2008 (12 U.S.C. 5221) is amended by
adding at the end the following new subsections:
``(e) Across-the-Board Executive Compensation and Corporate
Governance Requirements.--
``(1) Standards required.--Effective as of the date of the
enactment of the TARP Reform and Accountability Act of 2009
and notwithstanding any provision of, and in addition to any
requirement of subsection (a), (b), or (c) (other than the
definitions in subsection (b)(3)), the Secretary shall
require any assisted institution to meet standards for
executive compensation and corporate governance while any
assistance under this title is outstanding.
``(2) Specific requirements.--The standards established
under paragraph (1) shall include--
``(A) limits on compensation that exclude incentives for
senior executive officers of an assisted institution which
received assistance under this title to take unnecessary and
excessive risks that threaten the value of such institution
during the period that any assistance under this title is
outstanding;
``(B) a provision for the recovery by such institution of
any bonus or incentive compensation paid to a senior
executive officer based on statements of earnings, gains, or
other criteria that are later found to be materially
inaccurate;
``(C) a prohibition on such institution making any golden
parachute payment to a senior executive officer during the
period that the assistance under this title is outstanding;
``(D) a prohibition on such institution paying or accruing
any bonus or incentive compensation, during the period that
the assistance under this title is outstanding, to the 25
most highly-compensated employees; and
``(E) a prohibition on any compensation plan that would
encourage manipulation of such institution's reported
earnings to enhance the compensation of any of its employees.
``(3) Divestiture.--During the period in which any
assistance under this title to any assisted institution is
outstanding, the institution may not own or lease any private
passenger aircraft, or have any interest in such aircraft,
except that such institution shall not be treated as being in
violation of this provision with respect to any aircraft or
interest in any aircraft that was owned or held by the
institution immediately before receiving such assistance, as
long as the recipient demonstrates to the satisfaction of the
Secretary that all reasonable steps are being taken to sell
or divest such aircraft or interest.
``(4) Applicability to prior assistance.--Notwithstanding
any limitations included in subsection (a), (b), or (c) with
regard to applicability, the Secretary may apply the
requirements of and the standards established under this
subsection to any assisted institution that received any
assistance under this title on or after the date of the
enactment of the TARP Reform and Accountability Act of 2009.
``(f) Board Observer.--The Secretary may require the
attendance of an observer delegated by the Secretary, on
behalf of the Secretary, to attend the meetings of the board
of directors of any assisted institution that became an
assisted institution on or after
[[Page H337]]
October 3, 2008, and any committees of such board of
directors, while any assistance under this title is
outstanding.''.
(b) Repeal of De Minimis Exception.--Section 111(c) of the
Emergency Economic Stabilization Act of 2008 (12 U.S.C.
5221(c)) is amended by striking ``and only where such
purchases per financial institution in the aggregate exceed
$300,000,000 (including direct purchases),''.
SEC. 103. NEW LENDING BY INSURED DEPOSITORY INSTITUTIONS THAT
IS ATTRIBUTABLE TO TARP INVESTMENTS AND
ASSISTANCE.
Section 7(a) of the Federal Deposit Insurance Act (U.S.C.
1817(a)) is amended by adding at the end the following new
paragraph:
``(12) Lending increases attributable to investment or
other assistance under the troubled assets relief program.--
``(A) In general.--Each report of condition filed pursuant
to this subsection by an insured depository institution which
received an investment or other assistance under the Troubled
Assets Relief Program established by the Emergency Economic
Stabilization Act of 2008 or section 136(d) of the Energy
Independence and Security Act of 2007 shall report the amount
of any increase in new lending in the period covered by such
report (or the amount of any reduction in any decrease in new
lending) that is attributable to such investment or
assistance, to the extent possible.
``(B) Alternative measure.--If an insured depository
institution that is subject to subparagraph (A) cannot
accurately quantify the effect that an investment or other
assistance under such Troubled Assets Relief Program has had
on new lending by the institution, the insured depository
institution shall report the total amount of the increase in
new lending, if any, in the period covered by such report.
``(C) Designation of reporting requirement.--The Federal
banking agencies and the Secretary of the Treasury shall
specify the form, content, and manner of reports required
under this paragraph.''.
SEC. 104. OTHER PROTECTIONS FOR THE TAXPAYER.
(a) Warrant Requirements.--Subsection (d) of section 113 of
the Emergency Economic Stabilization Act of 2008 (12 U.S.C.
5223(d)) is amended by striking paragraph (1) and inserting
the following new paragraph:
``(1) Warrants.--
``(A) In general.--The Secretary may not provide any
assistance under this title to any institution, unless the
Secretary, receives from the institution--
``(i) in the case of an institution the securities of which
are traded on a national securities exchange, a warrant
giving the right to the Secretary to receive nonvoting common
stock or preferred stock in such institution, or voting
stock, with respect to which the Secretary agrees not to
exercise voting power, whichever the Secretary determines
appropriate; or
``(ii) in the case of an institution other than one
described in clause (i), a warrant for common or preferred
stock, or an instrument that is the economic equivalent (as
determined by the Secretary) of such a warrant in the
financial institution (in the case of a mutual association),
holding company of the financial institution, or any company
that controls a majority stake in the financial institution,
whichever the Secretary determines appropriate.
``(B) Amount.--
``(i) In general.--The warrants or instruments described in
subparagraph (A) with respect to an assisted institution
shall have a value equal to 15 percent of the aggregate
amount of all assistance provided to the institution under
this title. Such warrants or instruments shall entitle the
Government to purchase--
``(I) nonvoting common stock, up to a maximum amount of 15
percent of the issued and outstanding common stock of --
``(aa) the assisted institution; or
``(bb) in the case of an assisted institution, the
securities of which are not traded on a national securities
exchange, a holding company or company that controls a
majority of the stock thereof (in this section referred to as
the `warrant common'); and
``(II) preferred stock having an aggregate liquidation
preference equal to 15 percent of such aggregate loan amount,
less the value of common stock available for purchase under
the warrant common (in this section referred to as the
`warrant preferred').
``(ii) Common stock warrant price.--The exercise price on a
warrant or instrument described in paragraph (1) shall be--
``(I) the 15-day trailing average, as of 1 day prior to the
date on which any commitment to provide assistance under this
title was entered into, of the market price of the common
stock of the assisted institution; or
``(II) in the case of an assisted institution, which is a
mutual association or the securities of which are not traded
on a national securities exchange, the economic equivalent of
the market price described in clause (I), as determined by
the Secretary.
``(iii) Terms of preferred stock warrant.--
``(I) In general.--The initial exercise price for the
preferred stock warrant shall be $0.01 per share or such
greater amount as the corporate charter may require as the
par value per share of the warrant preferred. The Government
shall have the right to immediately exercise the warrants.
``(II) Redemption.--The warrant preferred may be redeemed
at any time after exercise of the preferred stock warrant at
100 percent of its issue price, plus any accrued and unpaid
dividends.''.
(b) Repeal of Certain Exception.--Section 113(d)(3) of the
Emergency Economic Stabilization Act of 2008 (12 U.S.C.
5223(d)(3)) is amended by striking subparagraph (A).
(c) Technical and Conforming Amendments.--Section 113(d)(2)
of the Emergency Economic Stabilization Act of 2008 (12
U.S.C. 2553(d)) is amended by striking subparagraph (E).
SEC. 105. AVAILABILITY OF TARP FUNDS TO SMALLER COMMUNITY
INSTITUTIONS.
(a) Prompt Action.--The Secretary shall promptly take all
necessary actions to make available funds under title I of
the Emergency Economic Stabilization Act of 2008 to smaller
community financial institutions.
(b) Comparable Terms.--If any institution becomes an
assisted institution after the date of the enactment of this
Act, such funding for depository institutions that--
(1) have submitted applications on which no action has been
taken, such as institutions that are C corporations
(including privately held institutions) and community
development financial institutions; or
(2) are of a type for which the Secretary has not yet
established an application deadline or for which any such
deadline has not yet occurred as of the date of the enactment
of this Act, such as institutions that are non-stock
corporations, S-corporations, mutually-owned insured
depository institutions (as defined in section 3 of the
Federal Deposit Insurance Act),
shall receive such funding on terms comparable to the terms
applicable to institutions that received funding prior to the
date of the enactment of this Act.
(c) Definitions.--For purposes of this section, the terms
``S Corporation'' and ``C Corporation'' shall have the same
meaning given to those terms in section 1361(a) of the
Internal Revenue Code of 1986.
SEC. 106. INCREASE IN SIZE AND AUTHORITY OF FINANCIAL
STABILITY OVERSIGHT BOARD.
(a) Authority.--Section 104 of the Emergency Economic
Stabilization Act of 2008 (12 U.S.C. 2514) is amended--
(1) by redesignating subsections (g) and (h) as subsections
(h) and (i), respectively; and
(2) by inserting after subsection (f) the following new
subsection:
``(g) Review and Decisionmaking.--After conducting any
review under this section of a policy determination made by
the Secretary, the Financial Stability Oversight Board may
overturn any such policy determination by a \2/3\ vote of all
members of such board.''.
(b) Appointment of 3 Additional Members.--Section 104(b) of
the Emergency Economic Stabilization Act of 2008 (12 U.S.C.
2514(b)) is amended--
(1) by striking ``and'' at the end of paragraph (4);
(2) by striking the period at the end of paragraph (5) and
inserting a semicolon; and
(3) by adding at the end the following new paragraphs:
``(6) the Chairperson of the Board of Directors of the
Federal Deposit Insurance Corporation; and
``(7) 2 members appointed by the President, by and with the
consent of the Senate, from among individuals who are not
officers or employees of the United States Government.''.
SEC. 107. CLARIFICATION.
Section 101 of the Emergency Economic Stabilization Act of
2008 (12 U.S.C. 2514(b)) is amended by adding at the end the
following new subsection:
``(f) Clarification.--Any provision of capital to, purchase
of equity in, or assistance provided to any institution under
this title shall be considered to be a purchase of troubled
assets for purposes of this title.''.
TITLE II--FORECLOSURE RELIEF
SEC. 201. TARP FORECLOSURE MITIGATION PLAN AND
IMPLEMENTATION.
(a) Plan Required.--Notwithstanding any provision of title
I of the Emergency Economic Stabilization Act of 2008, none
of the funds otherwise available to the Secretary of the
Treasury (in this title referred to as the ``Secretary'')
pursuant to section 115(a)(3) of such Act shall be available
to the Secretary after March 15, 2009, unless a comprehensive
plan to prevent and mitigate foreclosures on residential
properties, in accordance with the requirements of this
title, has been developed by the Secretary and approved by
the Financial Stability Oversight Board by such date.
(b) Commitment of Resources.--The comprehensive plan
established pursuant to subsection (a) shall require the
commitment of funds made available to the Secretary under
title I of the Emergency Economic Stabilization Act of 2008
in an amount up to $100,000,000,000, but in no case less than
$40,000,000,000.
(c) Implementation Required.--The Secretary shall begin
committing funds available to the Secretary under title I of
the Emergency Economic Stabilization Act of 2008 to implement
the comprehensive plan established pursuant to subsection (a)
by not later than April 1, 2009.
(d) Certification.--If by May 1, 2009, the Secretary does
not commit more than the minimum of $40,000,000,000 as
required under subsection (b), the Secretary shall certify to
the Congress, no later than May 15, 2009, the specific
reasons that such additional funds have not been committed.
[[Page H338]]
SEC. 202. ELEMENTS OF PLAN.
(a) Required Elements.--The comprehensive plan established
pursuant to section 201(a) shall comply with the following
requirements:
(1) Owner-occupied residences only.--The programs
implemented under the plan shall prevent and mitigate
foreclosures specifically on owner-occupied residential
properties.
(2) Leveraging of private capital.--The plan shall leverage
private capital to the maximum extent possible consistent
with the purpose of preventing and mitigating foreclosures on
such properties.
(3) Use of program alternatives.--The actions to be taken
under the plan shall consist of one, or a combination of more
than one, of the program alternatives set forth in section
203.
(b) Concentrations of Foreclosures.--The comprehensive plan
established pursuant to section 201(a) may include provisions
designed to prevent and mitigate foreclosures on residential
properties located in areas that are most seriously affected
by such foreclosures.
SEC. 203. PROGRAM ALTERNATIVES.
The program alternatives set forth in this section are as
follows:
(1) Systematic loan modification program.--The systematic
foreclosure prevention and mortgage modification program
under section 204.
(2) Reduction of hope for homeowners program costs.--A
program under which the Secretary--
(A) provides coverage for fees under the HOPE for
Homeowners Program under section 257 of the National Housing
Act (12 U.S.C. 1715z-23), as amended by title V of this Act;
or
(B) ensures the affordability of interest rates of
mortgages insured under such Program.
(3) Buy-down of second lien mortgages.--A program under
which the Secretary makes available to owners of owner-
occupied residential properties a direct mortgage loan the
proceeds of which shall be used only to reduce the
outstanding debt of such owner under an existing second lien
mortgage on such residential property, for the purpose of
facilitating loan modification, subject to such reductions in
the principal of such existing second lien mortgages as the
Secretary may require.
(4) Servicer incentives and assistance.--A program under
which the Secretary may make payments to servicers who
implement modifications to mortgages that result in mortgages
that meet such requirements as the Secretary shall establish.
(5) Loan purchases.--A program under which the Secretary,
or one or more entities that the Secretary, in consultation
with the Secretary of Housing and Urban Development, enters
into a contract with to carry out the program under this
paragraph, which may include the Federal Deposit Insurance
Corporation and entities selected as contractors under
section 107 of the Emergency Economic Stabilization Act of
2008, purchases whole loans for the purpose of modifying or
refinancing the loans.
SEC. 204. SYSTEMATIC FORECLOSURE PREVENTION AND MORTGAGE
MODIFICATION PLAN ESTABLISHED.
(a) In General.--The systematic foreclosure prevention and
mortgage modification program under this section shall be a
program established by the Secretary, in consultation with
the Chairperson of the Board of Directors of the Federal
Deposit Insurance Corporation and the Secretary of Housing
and Urban Development, that--
(1) provides lenders and loan servicers with certain
compensation to cover administrative costs for each loan
modified according to the required standards; and
(2) provides loss sharing or guarantees for certain losses
incurred if a modified loan should subsequently re-default.
(b) Program Administration.--The Secretary, in consultation
with the Secretary of Housing and Urban Development, may
contract with one or more entities, including the Federal
Deposit Insurance Corporation and entities selected as
contractors under section 107 of the Emergency Economic
Stabilization Act of 2008, to conduct the program activities
required under the program under this section.
(c) Program Components.--The program established under
subsection (a) may include the following components:
(1) Eligible borrowers.--The program shall be limited to
loans secured by owner-occupied properties.
(2) Exclusion for early payment default.--To promote
sustainable mortgages, loss sharing or guarantees shall be
available only after the borrower has made a specified
minimum number of payments on the modified mortgage.
(3) Standard net present value test.--In order to promote
consistency and simplicity in implementation and audit, the
Secretary shall prescribe a standardized net present value
analysis for participating lenders and servicers comparing
the expected net present value of modifying past due loans
compared to the net present value of foreclosing on them will
be applied. Under this test, standard assumptions shall be
used to ensure that a consistent standard for affordability
is provided based on a ratio of the borrower's mortgage-
related expenses for the first priority mortgage-to-gross
income specified by the Secretary.
(4) Systematic loan review by participating lenders and
servicers.--Participating lenders and servicers shall be
required to undertake a systematic review of all of the loans
under their management, to subject each loan to a standard
net present value test to determine whether it is a suitable
candidate for modification, and to offer modifications for
all loans that pass this test. The penalty for failing to
undertake such a systematic review and to carry out
modifications where they are justified would be
disqualification from further participation in the program
until such a systematic program was introduced.
(5) Modifications.--Modifications may include any of the
following:
(A) Reduction in interest rates and fees.
(B) Term or amortization extensions.
(C) Forbearance or forgiveness of principal.
(D) Other similar modifications.
(6) Simplified loss share calculation.--In order to ensure
the administrative efficiency and effective operation of the
program, the Secretary shall define appropriate measures for
loss sharing or guarantees designed to reduce the risk and
loss upon redefault of modified mortgages in order to provide
adequate incentives to lenders, servicers, and investors to
modify eligible mortgages and avoid unnecessary foreclosures.
Interim modifications shall be allowed.
(7) De minimis test.--To lower administrative costs, a de
minimis test shall be used to exclude from loss sharing any
modification that does not lower the monthly payment at least
10 percent.
(8) 8 year limit on loss sharing payment.--The loss sharing
guarantee shall terminate at the end of the 8-year period
beginning on the date the modification was consummated.
(d) Alternative Components.--The Secretary may, with the
approval of the Board, implement foreclosure prevention and
mitigation actions other than those included pursuant to
subsection (c) in the comprehensive plan initially approved
by the Board pursuant to section 201(a) that the Secretary
believes would provide equivalent or greater impact on
foreclosure mitigation.
(e) Regulations.--The Secretary shall prescribe such
regulations as may be necessary to implement this section and
prevent evasions thereof.
(f) Troubled Assets.--The costs incurred by the Federal
Government in carrying out the loan modification program
established under this section shall be covered out of the
funds made available to the Secretary of the Treasury under
section 118 of the Emergency Economic Stabilization Act of
2008 or such other funds as may be available to the
Secretary.
(g) Report.--Before the end of the 6-month period beginning
on the date of the enactment of this Act, the Secretary shall
submit a progress report to the Congress containing such
findings and such recommendations for legislative or
administrative action as the Secretary may determine to be
appropriate.
SEC. 204. MODIFICATION OF PLAN.
(a) In General.--If the Secretary, in consultation with the
Chairperson of the Board of Directors of the Federal Deposit
Insurance Corporation and the Secretary of Housing and Urban
Development, determines at any time that modification of the
comprehensive plan initially approved by the Board pursuant
to section 201(a) (as such plan may subsequently have been
modified pursuant to this section), or that modification of
any component program element, is necessary to maximize the
prevention of foreclosures on residential properties or
minimize costs to taxpayers of such foreclosure mitigation,
the Secretary may modify the plan or program element, but
only to the extent such modifications are approved by the
Board.
SEC. 205. SERVICER SAFE HARBOR.
(a) Safe Harbor.--
(1) Loan modifications and workout plans.--Notwithstanding
any other provision of law, and notwithstanding any
investment contract between a servicer and a securitization
vehicle or investor, a servicer that acts consistent with the
duty set forth in section 129A(a) of Truth in Lending Act (15
U.S.C. 1639a) shall not be liable for entering into a loan
modification or workout plan with respect to any such
mortgage that meets all of the criteria set forth in
paragraph (2)(B) to--
(A) any person, based on that person's ownership of a
residential mortgage loan or any interest in a pool of
residential mortgage loans or in securities that distribute
payments out of the principal, interest and other payments in
loans on the pool;
(B) any person who is obligated to make payments determined
in reference to any loan or any interest referred to in
subparagraph (A); or
(C) any person that insures any loan or any interest
referred to in subparagraph (A) under any law or regulation
of the United States or any law or regulation of any State or
political subdivision of any State.
(2) Ability to modify mortgages.--
(A) Ability.--Notwithstanding any other provision of law,
and notwithstanding any investment contract between a
servicer and a securitization vehicle or investor, a
servicer--
(i) shall not be limited in the ability to modify
mortgages, the number of mortgages that can be modified, the
frequency of loan modifications, or the range of permissible
modifications; and
(ii) shall not be obligated to repurchase loans from or
otherwise make payments to the securitization vehicle on
account of a
[[Page H339]]
modification, workout, or other loss mitigation plan for a
residential mortgage or a class of residential mortgages that
constitute a part or all of the mortgages in the
securitization vehicle,
if any mortgage so modified meets all of the criteria set
forth in subparagraph (B).
(B) Criteria.--The criteria under this subparagraph with
respect to a mortgage are as follows:
(i) Default on the payment of such mortgage has occurred or
is reasonably foreseeable.
(ii) The property securing such mortgage is occupied by the
mortgagor of such mortgage.
(iii) The servicer reasonably and in good faith believes
that the anticipated recovery on the principal outstanding
obligation of the mortgage under the particular modification
or workout plan or other loss mitigation action will exceed,
on a net present value basis, the anticipated recovery on the
principal outstanding obligation of the mortgage to be
realized through foreclosure.
(3) Applicability.--This subsection shall apply only with
respect to modifications, workouts, and other loss mitigation
plans initiated before January 1, 2012.
(b) Legal Costs.--If an unsuccessful action is brought
against a servicer by any person described in subparagraph
(A), (B), or (C) of subsection (a)(1), such person shall bear
any actual legal costs of the servicer, including reasonable
attorney fees and expert witness fees, incurred in good faith
in such action, as determined by the court.
(c) Reporting.--Each servicer that engages in loan
modifications or workout plans subject to the safe harbor in
subsection (a) shall report to the Secretary on a regular
basis regarding the extent, scope and results of the
servicer's modification activities. The Secretary shall
prescribe regulations specifying the form, content, and
timing of such reports.
(d) Definition of Securitization Vehicles.--For purposes of
this section, the term ``securitization vehicle'' means a
trust, corporation, partnership, limited liability entity,
special purpose entity, or other structure that--
(1) is the issuer, or is created by the issuer, of mortgage
pass-through certificates, participation certificates,
mortgage-backed securities, or other similar securities
backed by a pool of assets that includes residential mortgage
loans; and
(2) holds such mortgages.
SEC. 206. REPORT BY CONGRESSIONAL OVERSIGHT PANEL.
The Congressional Oversight Panel established by section
125 of the Emergency Economic Stabilization Act of 2008 shall
submit a report to the Congress, not later than July 1, 2009,
regarding--
(1) the actions taken by the Secretary pursuant to this
title;
(2) the impact and effectiveness of such actions on
foreclosures on residential properties; and
(3) the effectiveness of such actions from the standpoint
of minimizing costs to the taxpayers.
TITLE III--AUTO INDUSTRY FINANCING AND RESTRUCTURING
SEC. 301. SHORT TITLE.
This title may be cited as the ``TARP Reform and
Accountability Act of 2009''.
SEC. 302. DIRECT LOAN PROVISIONS.
(a) In General.--The Emergency Economic Stabilization Act
of 2008 (division A of Public Law 110-343) is amended by
adding at the end the following:
``TITLE IV--AUTO INDUSTRY FINANCING AND RESTRUCTURING
``SEC. 401. PURPOSES.
``The purposes of this title are--
``(1) to clarify and confirm the authority and facilities
to restore liquidity and stability to domestic vehicle
manufacturers in the United States; and
``(2) to ensure that such authority and such facilities are
used in a manner that--
``(A) results in a viable and competitive domestic
automobile industry that minimizes adverse effects on the
environment;
``(B) enhances the ability and the capacity of the domestic
automobile industry to pursue the timely and aggressive
production of energy-efficient advanced technology vehicles;
``(C) preserves and promotes the jobs of American workers
employed directly by the domestic automobile industry and in
related industries;
``(D) safeguards the ability of the domestic automobile
industry to provide retirement and health care benefits for
the industry's retirees and their dependents; and
``(E) stimulates manufacturing and sales of automobiles
produced by automobile manufacturers in the United States.
``SEC. 402. PRESIDENTIAL DESIGNATION.
``(a) Designation.--The President shall designate one or
more officers from the Executive Branch having appropriate
expertise in such areas as economic stabilization, financial
aid to commerce and industry, financial restructuring, energy
efficiency, and environmental protection (who shall
hereinafter in this title be collectively referred to as the
`President's designee') to carry out the purposes of this
title, including the facilitation of restructuring necessary
to achieve the long-term financial viability of domestic
automobile manufacturers, who shall serve at the pleasure of
the President.
``(b) Additional Persons.--The President or the President's
designee may also employ, appoint, or contract with
additional persons having such expertise as the President or
the President's designee believes will assist the Government
in carrying out the purposes of this title.
``(c) Participation by Other Agency Personnel.--Other
Federal agencies may provide, at the request of the
President's designee, staff on detail from such agencies for
purposes of carrying out this title.
``SEC. 403. BRIDGE FINANCING.
``(a) In General.--The President's designee shall authorize
and direct the disbursement of bridge loans or enter into
commitments for lines of credit to each automobile
manufacturer that submitted a plan to the Congress on
December 2, 2008 (hereafter in this title referred to as an
`eligible automobile manufacturer'), and has submitted a
request for such loan or commitment. Nothing in this section
shall preclude the President's designee from authorizing and
directing the disbursement of bridge loans or entering into
commitments for lines of credit to other entities.
``(b) Amount of Assistance.--The President's designee shall
authorize bridge loans or commitments for lines of credit to
each eligible automobile manufacturer in an amount that is
intended to facilitate the continued operations of the
eligible automobile manufacturer and to prevent the failure
of the eligible automobile manufacturer, consistent with the
plan submitted on December 2, 2008, and subject to available
funds.
``SEC. 404. RESTRUCTURING PROGRESS ASSESSMENT.
``(a) Establishment of Measures for Assessing Progress.--
Not later than February 1, 2009, the President's designee
shall determine appropriate measures for assessing the
progress of each eligible automobile manufacturer toward
transforming the plan submitted by such manufacturer to the
Congress on December 2, 2008, into the restructuring plan to
be submitted under section 405(b).
``(b) Evaluation of Progress on Basis of Restructuring
Progress Assessment Measures.--
``(1) In general.--The President's designee shall evaluate
the progress of each eligible automobile manufacturer toward
the development of a restructuring plan, on the basis of the
restructuring progress assessment measures established under
this section for such manufacturer.
``(2) Timing.--Each evaluation required under paragraph (1)
for any eligible automobile manufacturer shall be conducted
at the end of the 15-day period beginning on the date on
which the restructuring progress assessment measures were
established by the President's designee for such eligible
automobile manufacturer.
``SEC. 405. SUBMISSION OF PLANS.
``(a) Negotiated Plans.--
``(1) Facilitation.--
``(A) In general.--Beginning on the date of any
disbursement under the facility, the President's designee
shall seek to facilitate agreement on any restructuring plan
to achieve and sustain the long-term viability, international
competitiveness, and energy efficiency of an eligible
automobile manufacturer, negotiated and agreed to by
representatives of interested parties (in this title referred
to as a `negotiated plan') with respect to any eligible
automobile manufacturer.
``(B) Interested parties.--For purposes of this section,
the term `interested party' shall be construed broadly so as
to include all persons who have a direct financial interest
in a particular automobile manufacturer, including--
``(i) employees and retirees of the eligible automobile
manufacturer;
``(ii) trade unions;
``(iii) creditors;
``(iv) suppliers;
``(v) automobile dealers; and
``(vi) shareholders.
``(2) Actions of the president's designee.--
``(A) In general.--For the purpose of achieving a
negotiated plan, the President's designee may convene, chair,
and conduct formal and informal meetings, discussions, and
consultations, as appropriate, with interested parties of an
eligible automobile manufacturer.
``(B) Clarification.--The Federal Advisory Committee Act
shall not apply with respect to any of the activities
conducted or taken by the President's designee pursuant to
this title.
``(b) Restructuring Plan.--Not later than March 31, 2009,
each eligible automobile manufacturer shall submit to the
President's designee a restructuring plan to achieve and
sustain the long-term viability, international
competitiveness, and energy efficiency of the eligible
automobile manufacturer (in this title referred to as the
`restructuring plan') in accordance with this section. The
President's designee shall approve the restructuring plan if
the President's designee determines that the plan will result
in--
``(1) the repayment of all Government-provided financing,
consistent with the terms specified in section 408, or
otherwise agreed to;
``(2) the ability--
``(A) to comply with applicable fuel efficiency and
emissions requirements;
``(B) to commence domestic manufacturing of advanced
technology vehicles, as described in section 136 of the
Energy Independence and Security Act of 2007 (Public Law 110-
140; 42 U.S.C. 17013); and
``(C) to produce new and existing products and capacity;
[[Page H340]]
``(3) the achievement of a positive net present value,
using reasonable assumptions and taking into account all
existing and projected future costs, including repayment of
any financial assistance provided pursuant to this title;
``(4) the ability to rationalize costs, capitalization, and
capacity with respect to the manufacturing workforce,
suppliers, and dealerships of the eligible automobile
manufacturer;
``(5) proposals to restructure existing debt, including,
where appropriate, the conversion of debt to equity, to
improve the ability of the eligible automobile manufacturer
to raise private capital; and
``(6) a product mix and cost structure that is competitive
in the marketplace.
``(c) Extension of Negotiations and Plan Deadline.--
Notwithstanding the time limitations in subsection (b), the
President's designee, upon making a determination that the
interested parties are negotiating in good faith, are making
significant progress, and that an additional period of time
would likely facilitate agreement on a negotiated plan, and
upon notification of the Congress, may extend for not longer
than 30 additional days the negotiation period under
subsection (b).
``SEC. 406. FINANCING FOR RESTRUCTURING.
``Upon approval by the President's designee of a
restructuring plan, the President's designee may provide
financial assistance to an eligible automobile manufacturer
to implement the restructuring plan.
``SEC. 407. DISAPPROVAL AND CALL OF LOAN.
``If the President's designee has not approved the
restructuring plan at the expiration of the period provided
in section 405 for submission and approval of the
restructuring plan, the President's designee shall call the
loan or cancel the commitment within 30 days, unless a
restructuring plan is approved within that period.
``SEC. 408. TERMS AND CONDITIONS.
``(a) Duration.--The duration of any loan made under this
title shall be 7 years, or such period as the President's
designee may determine with respect to such loan.
``(b) No Prepayment Penalty.--A loan made under this title
shall be prepayable without penalty at any time.
``(c) Information Access.--As a condition for the receipt
of any financial assistance made under this title, an
eligible automobile manufacturer shall agree--
``(1) to allow the President's designee to examine any
books, papers, records, or other data of the eligible
automobile manufacturer, and those of any subsidiary,
affiliate, or entity holding an ownership interest of 50
percent or more of such automobile manufacturer, that may be
relevant to the financial assistance, including compliance
with the terms of a loan or any conditions imposed under this
title; and
``(2) to provide in a timely manner any information
requested by the President's designee, including requiring
any officer or employee of the eligible automobile
manufacturer, any subsidiary, affiliate, or entity referred
to in paragraph (1) with respect to such manufacturer, or any
person having possession, custody, or care of the reports and
records required under paragraph (1), to appear before the
President's designee at a time and place requested and to
provide such books, papers, records, or other data, as
requested, as may be relevant or material.
``(d) Oversight of Transactions and Financial Condition.--
``(1) Duty to inform.--During the period in which any loan
extended under this title remains outstanding, the eligible
automobile manufacturer which received such loan shall
promptly inform the President's designee of--
``(A) any asset sale, investment, contract, commitment, or
other transaction proposed to be entered into by such
eligible automobile manufacturer that has a value in excess
of $100,000,000; and
``(B) any other material change in the financial condition
of such eligible automobile manufacturer.
``(2) Authority of the president's designee.--During the
period in which any loan extended under this title remains
outstanding, the President's designee may--
``(A) review any asset sale, investment, contract,
commitment, or other transaction described in paragraph (1);
and
``(B) prohibit the eligible automobile manufacturer which
received the loan from consummating any such proposed sale,
investment, contract, commitment, or other transaction, if
the President's designee determines that consummation of such
transaction would be inconsistent with or detrimental to the
long-term viability of the eligible automobile manufacturer.
``(3) Procedures.--The President's designee may establish
procedures for conducting any review under this subsection.
``(e) Consequences for Failure To Comply.--The terms of any
financial assistance made under this title shall provide that
if--
``(1) an evaluation by the President's designee under
section 404(b) demonstrates that the eligible automobile
manufacturer which received the financial assistance has
failed to make adequate progress towards meeting the
restructuring progress assessment measures established by the
President's designee under section 404(a) with respect to
such recipient;
``(2) after March 31, 2009, the eligible automobile
manufacturer which received the financial assistance fails to
submit an acceptable restructuring plan under section 405(b),
or fails to comply with any conditions or requirement
applicable under this title or applicable fuel efficiency and
emissions requirements; or
``(3) after a restructuring plan of an eligible automobile
manufacturer has been approved by the President's designee,
the auto manufacturer fails to make adequate progress in the
implementation of the plan, as determined by the President's
designee,
the repayment of any loan may be accelerated to such earlier
date or dates as the President's designee may determine and
any other financial assistance may be cancelled by the
President's designee.
``SEC. 409. TAXPAYER PROTECTION.
``(a) Warrants.--
``(1) In general.--The President's designee may not provide
any loan under this title, unless the President's designee,
or such department or agency as is designated for such
purpose by the President, receives from the eligible
automobile manufacturer--
``(A) in the case of an eligible automobile manufacturer,
the securities of which are traded on a national securities
exchange, a warrant giving the right to the President's
designee to receive nonvoting common stock or preferred stock
in such eligible automobile manufacturer, or voting stock,
with respect to which the President's designee agrees not to
exercise voting power, whichever the President's designee
determines appropriate; or
``(B) in the case of an eligible automobile manufacturer
other than one described in subparagraph (A), a warrant for
common or preferred stock, or an instrument that is the
economic equivalent (as determined by the President's
designee) of such a warrant in the holding company of the
eligible automobile manufacturer, or any company that
controls a majority stake in the eligible automobile
manufacturer, whichever the President's designee determines
appropriate.
``(2) Amount.--
``(A) In general.--The warrants or instruments described in
paragraph (1) shall have a value equal to 20 percent of the
aggregate amount of all loans provided to the eligible
automobile manufacturer under this title. Such warrants or
instruments shall entitle the Government to purchase--
``(i) nonvoting common stock, up to a maximum amount of 20
percent of the issued and outstanding common stock of--
``(I) the eligible automobile manufacturer; or
``(II) in the case of an eligible automobile manufacturer,
the securities of which are not traded on a national
securities exchange, a holding company or company that
controls a majority of the stock thereof (in this section
referred to as the `warrant common'); and
``(ii) preferred stock having an aggregate liquidation
preference equal to 20 percent of such aggregate loan amount,
less the value of common stock available for purchase under
the warrant common (in this section referred to as the
`warrant preferred').
``(B) Common stock warrant price.--The exercise price on a
warrant or instrument described in paragraph (1) shall be--
``(i) the 15-day trailing average, as of the day before the
date on which any commitment to provide a loan was entered
into, of the market price of the common stock of the eligible
automobile manufacturer which received any loan under this
title; or
``(ii) in the case of an eligible automobile manufacturer,
the securities of which are not traded on a national
securities exchange, the economic equivalent of the market
price described in clause (i), as determined by the
President's designee.
``(C) Terms of preferred stock warrant.--
``(i) In general.--The initial exercise price for the
preferred stock warrant shall be $0.01 per share or such
greater amount as the corporate charter may require as the
par value per share of the warrant preferred. The Government
shall have the right to immediately exercise the warrants.
``(ii) Redemption.--The warrant preferred may be redeemed
at any time after exercise of the preferred stock warrant at
100 percent of its issue price, plus any accrued and unpaid
dividends.
``(iii) Other terms and conditions.--Other terms and
conditions of the warrant preferred shall be determined by
the President's designee to protect the interests of
taxpayers.
``(3) Application of other provisions of law.--Except as
otherwise provided in this section, the requirements for the
purchase of warrants under section 113(d)(2) of the Emergency
Economic Stabilization Act of 2008 (division A of Public Law
110-343) shall apply to any warrant or instrument described
in paragraph (1), including the antidilution protection
provisions therein.
``(b) Executive Compensation and Corporate Governance.--
``(1) In general.--During the period in which any financial
assistance under this title remains outstanding, the eligible
automobile manufacturer which received such assistance shall
be subject to--
``(A) the standards established by the President's designee
under paragraph (2); and
``(B) the provisions of section 162(m)(5) of the Internal
Revenue Code of 1986, as applicable.
``(2) Standards required.--The President's designee shall
require any eligible automobile manufacturer which received
any financial assistance under this title to meet appropriate
standards for executive compensation and corporate
governance.
[[Page H341]]
``(3) Specific requirements.--The standards established
under paragraph (2) shall include--
``(A) limits on compensation that exclude incentives for
senior executive officers of an eligible automobile
manufacturer which received assistance under this title to
take unnecessary and excessive risks that threaten the value
of such manufacturer during the period that the loan is
outstanding;
``(B) a provision for the recovery by such automobile
manufacturer of any bonus or incentive compensation paid to a
senior executive officer based on statements of earnings,
gains, or other criteria that are later found to be
materially inaccurate;
``(C) a prohibition on such automobile manufacturer making
any golden parachute payment to a senior executive officer
during the period that the loan is outstanding;
``(D) a prohibition on such automobile manufacturer paying
or accruing any bonus or incentive compensation during the
period that the loan is outstanding to the 25 most highly-
compensated employees; and
``(E) a prohibition on any compensation plan that would
encourage manipulation of such automobile manufacturer's
reported earnings to enhance the compensation of any of its
employees.
``(4) Divestiture.--During the period in which any
financial assistance provided under this title to any
eligible automobile manufacturer is outstanding, the eligible
automobile manufacturer may not own or lease any private
passenger aircraft, or have any interest in such aircraft,
except that such eligible automobile manufacturer shall not
be treated as being in violation of this provision with
respect to any aircraft or interest in any aircraft that was
owned or held by the manufacturer immediately before
receiving such assistance, as long as the recipient
demonstrates to the satisfaction of the President's designee
that all reasonable steps are being taken to sell or divest
such aircraft or interest.
``(5) Definitions.--For purposes of this subsection, the
following definitions shall apply:
``(A) Senior executive officer.--The term `senior executive
officer' means an individual who is one of the top five most
highly paid executives of a public company, whose
compensation is required to be disclosed pursuant to the
Securities Exchange Act of 1934, and any regulations issued
thereunder, and non-public company counterparts.
``(B) Golden parachute payment.--The term `golden parachute
payment' means any payment to a senior executive officer for
departure from a company for any reason, except for payments
for services performed or benefits accrued.
``(c) Prohibition on Payment of Dividends.--Except with
respect to obligations owed pursuant to law to any
nonaffiliated party or any existing contract with any
nonaffiliated party in effect as of December 2, 2008, no
dividends or distributions of any kind, or the economic
equivalent thereof (as determined by the President's
designee), may be paid by any eligible automobile
manufacturer which receives financial assistance under this
title, or any holding company or company that controls a
majority stake in the eligible automobile manufacturer, while
such financial assistance is outstanding.
``(d) Other Interests Subordinated.--
``(1) In general.--In the case of an eligible automobile
manufacturer which received a loan under this title, to the
extent permitted by the terms of any obligation, liability,
or debt of the eligible automobile manufacturer in effect as
of December 2, 2008, any other obligation of such eligible
automobile manufacturer shall be subordinate to such loan,
and such loan shall be senior and prior to all obligations,
liabilities, and debts of the eligible automobile
manufacturer, and such eligible automobile manufacturer shall
provide to the Government, all available security and
collateral against which the loans under this title shall be
secured.
``(2) Applicability in certain cases.--In the case of an
eligible automobile manufacturer referred to in paragraph
(1), the securities of which are not traded on a national
securities exchange, a loan under this title to the eligible
automobile manufacturer shall--
``(A) be treated as a loan to any holding company of, or
company that controls a majority stake in, the eligible
automobile manufacturer; and
``(B) be senior and prior to all obligations, liabilities,
and debts of any such holding company or company that
controls a majority stake in the eligible automobile
manufacturer.
``(e) Additional Taxpayer Protections.--
``(1) Discharge.--A discharge under title 11, United States
Code, shall not discharge an eligible automobile
manufacturer, or any successor in interest thereto, from any
debt for financial assistance received pursuant to this
title.
``(2) Exemption.--Any financial assistance provided to an
eligible automobile manufacturer under this title shall be
exempt from the automatic stay established by section 362 of
title 11, United States Code.
``(3) Interested parties.--Notwithstanding any provision of
title 11, United States Code, any interest in property or
equity rights of the United States arising from financial
assistance provided to an eligible automobile manufacturer
under this title shall remain unaffected by any plan of
reorganization, except as the United States may agree to in
writing.
``SEC. 410. OVERSIGHT AND AUDITS.
``(a) Comptroller General Oversight.--
``(1) Scope of oversight.--The Comptroller General of the
United States shall conduct ongoing oversight of the
activities and performance of the President's designee.
``(2) Conduct and administration of oversight.--
``(A) GAO presence.--The President's designee shall provide
to the Comptroller General appropriate space and facilities
for purposes of this subsection.
``(B) Access to records.--To the extent otherwise
consistent with law, the Comptroller General shall have
access, upon request, to any information, data, schedules,
books, accounts, financial records, reports, files,
electronic communications, or other papers, things, or
property belonging to or in use by the President's designee,
at such reasonable time as the Comptroller General may
request. The Comptroller General shall be afforded full
facilities for verifying transactions with the balances or
securities held by depositaries, fiscal agents, and
custodians. The Comptroller General may make and retain
copies of such books, accounts, and other records as the
Comptroller General deems appropriate.
``(3) Reporting.--The Comptroller General shall submit
reports of findings under this section to Congress, regularly
and not less frequently than once every 60 days. The
Comptroller General may also submit special reports under
this subsection, as warranted by the findings of its
oversight activities.
``(b) Special Inspector General.--It shall be the duty of
the Special Inspector General established under section 121
of Public Law 110-343 to conduct, supervise, and coordinate
audits and investigations of the President's designee in
addition to the duties of the Special Inspector General under
such section and for such purposes. The Special Inspector
General shall also have the duties, responsibilities, and
authorities of inspectors general under the Inspector General
Act of 1978, including section 6 of such Act. In the event
that the Office of the Special Inspector General is
terminated, the Inspector General of the Department of the
Treasury shall assume the responsibilities of the Special
Inspector General under this subsection.
``(c) Access to Records of Borrowers by GAO.--
Notwithstanding any other provision of law, during the period
in which any financial assistance provided under this title
is outstanding, the Comptroller General of the United States
shall have access, upon request, to any information, data,
schedules, books, accounts, financial records, reports,
files, electronic communications, or other papers, things, or
property belonging to or in use by the eligible automobile
manufacturer, and any subsidiary, affiliate, or entity
holding an ownership interest of 50 percent or more of such
eligible automobile manufacturer (collectively referred to in
this section as `related entities'), and to any officer,
director, or other agent or representative of the eligible
automobile manufacturer and its related entities, at such
reasonable times as the Comptroller General may request. The
Comptroller General may make and retain copies of such books,
accounts, and other records as the Comptroller General deems
appropriate.
``SEC. 411. REPORTING AND MONITORING.
``(a) Reporting on Consummation of Loans.--The President's
designee shall submit a report to the Congress on each bridge
loan made under this title not later than 5 days after the
date of the consummation of such loan.
``(b) Reporting on Restructuring Progress Assessment
Measures.--The President's designee shall submit a report to
the Congress on the restructuring progress assessment
measures established for each manufacturer under section
404(a) not later than 10 days after establishing the
restructuring progress assessment measures.
``(c) Reporting on Evaluations.--The President's designee
shall submit a report to the Congress containing the detailed
findings and conclusions of the President's designee in
connection with the evaluation of an eligible automobile
manufacturer under section 404(b).
``(d) Reporting on Consequences for Failure to Comply.--The
President's designee shall submit a report to the Congress on
the exercise of a right under section 408(e) to accelerate
indebtedness of an eligible automobile manufacturer under
this title or to cancel any other financial assistance
provided to such eligible automobile manufacturer, and the
facts and circumstances on which such exercise was based,
before the end of the 10-day period beginning on the date of
the exercise of the right.
``(e) Monitoring.--The President's designee shall monitor
the use of loan funds received by eligible automobile
manufacturers under this title, and shall report to Congress
once every 90 days (beginning 30 days after the date of
enactment of this title) on the progress of the ability of
the recipient of the loan to continue operations and proceed
with restructuring processes that restore the financial
viability of the recipient and promote environmental
sustainability.
``SEC. 412. REPORT TO CONGRESS ON LACK OF PROGRESS TOWARD
ACHIEVING AN ACCEPTABLE NEGOTIATED PLAN.
``(a) Authority To Facilitate a Negotiated Plan.--At any
such time as the President's designee determines that action
is necessary to avoid disruption to the economy or to achieve
a negotiated plan, the President's designee shall submit to
Congress a report outlining any additional powers and
authorities necessary to facilitate
[[Page H342]]
the completion of a negotiated plan required under section
405.
``(b) Impediments to Achieving Negotiated Plans.--If the
President's designee determines, on the basis of an
evaluation by the President's designee of the progress being
made by an eligible automobile manufacturer toward meeting
the restructuring progress assessment measures established
under section 404, that adequate progress is not being made
toward achieving a negotiated plan by March 31, 2009, the
President's designee shall submit to Congress a report
detailing the impediments to achievement of a negotiated plan
by the eligible automobile manufacturer.
``SEC. 413. SUBMISSION OF PLAN TO CONGRESS BY THE PRESIDENT'S
DESIGNEE.
``Upon submission of a report pursuant to section 412(b),
the President's designee shall provide to Congress a plan
that represents the judgement of the President's designee as
to the steps necessary to achieve the long-term viability,
international competitiveness, and energy efficiency of the
eligible automobile manufacturer, consistent with the factors
set forth in section 405(b), including through a negotiated
plan, a plan to be implemented by legislation, or a
reorganization pursuant to chapter 11 of title 11, United
States Code.
``SEC. 414. COORDINATION WITH OTHER LAWS.
``(a) In General.--No provision of this title may be
construed as altering, affecting, or superseding--
``(1) the provisions of section 129 of division A of the
Consolidated Security, Disaster Assistance, and Continuing
Appropriations Act, 2009, relating to funding for the
manufacture of advanced technology vehicles;
``(2) any existing authority to provide financial
assistance or liquidity for purposes of the day-to-day
operations in the ordinary course of business or research and
development.
``(b) Antitrust Provisions.--
``(1) In general.--Subject to paragraphs (2) and (4), the
antitrust laws shall not apply to meetings, discussions, or
consultations among an eligible automobile manufacturer and
its interested parties for the purpose of achieving a
negotiated plan pursuant to section 405(a)(2).
``(2) Exclusions.--Paragraph (1) shall not apply with
respect to price-fixing, allocating a market between
competitors, monopolizing (or attempting to monopolize) a
market, or boycotting.
``(3) Antitrust agency participation.--The Attorney General
of the United States and the Federal Trade Commission shall,
to the extent practicable, receive reasonable advance notice
of, and be permitted to participate in, each meeting,
discussion, or consultation described in paragraph (1).
``(4) Preservation of enforcement authority.--Paragraph (1)
shall not be construed to preclude the Attorney General of
the United States or the Federal Trade Commission from
bringing an enforcement action under the antitrust laws for
injunctive relief.
``(5) Sunset.--Paragraph (1) shall apply only with respect
to meetings, discussions, or consultations that occur within
the 3-year period beginning on the date of the enactment of
this title.
``(6) Definition.--For purposes of this subsection, the
term `antitrust laws'--
``(A) has the same meaning as in subsection (a) of the
first section of the Clayton Act (15 U.S.C. 12(a)), except
that such term includes section 5 of the Federal Trade
Commission Act (15 U.S.C. 45), to the extent that such
section 5 applies to unfair methods of competition; and
``(B) includes any provision of State law that is similar
to the laws referred to in subparagraph (A).
``SEC. 415. TREATMENT OF RESTRUCTURING FOR PURPOSES OF
APPLYING LIMITATIONS ON NET OPERATING LOSS
CARRYFORWARDS AND CERTAIN BUILT-IN LOSSES.
``Section 382 of the Internal Revenue Code of 1986 shall
not apply in the case of an ownership change resulting from
this title or pursuant to a restructuring plan approved under
this title.
``SEC. 416. CLARIFICATION OF AVAILABILITY OF FINANCIAL
SUPPORT FOR FINANCING ARMS.
``The authority of the President's designee to provide
assistance to any eligible automobile manufacturer includes
the authority to provide support to finance company
affiliates of the manufacturer to ensure that such affiliates
have the necessary resources to continue to provide needed
credit, including through dealer and other financing of
consumer and business auto and other vehicle loans and dealer
floor plan loans.''.
TITLE IV--CLARIFICATION OF AUTHORITY
SEC. 401. CONSUMER LOANS.
Title I of the Emergency Economic Stabilization Act of 2008
(12 U.S.C. 5211 et seq.) is amended by adding at the end the
following new section:
``SEC. 137. CLARIFICATION OF AUTHORITY REGARDING CONSUMER
LOANS.
``The authority of the Secretary to take any action under
this title includes the authority to establish or support
facilities to support the availability of consumer loans,
including loans for autos and other vehicles and student
loans, including through purchase of asset-backed securities,
directly or through the Board or any Federal reserve bank.''.
SEC. 402. MUNICIPAL SECURITIES.
Section 103 of the Emergency Economic Stabilization Act of
2008 (12 U.S.C. 5211) is amended by inserting after
subsection (f) (as added by section 401 of this title) the
following new subsection:
``(g) Clarification of Authority Regarding Municipal
Securities.--
``(1) Clarification.--The authority of the Secretary to
take any action under this title includes the authority to
provide support to State and local governments, and other
issuers of municipal securities, which are having difficulty
accessing appropriate financing in the capital markets. Such
support includes the direct purchase of municipal securities
and providing credit enhancement in connection with municipal
securities whose purchase is financed under any facility
provided by the Board or any Federal reserve bank.
``(2) Definition.--For purposes of this subsection, the
term `municipal security' has the meaning given the term
`State or local bond' in section 103(c) of the Internal
Revenue Code of 1986 (26 U.S.C. 103(c)) and the regulations
issued thereunder.''.
SEC. 403. COMMERCIAL REAL ESTATE LOANS.
Title I of the Emergency Economic Stabilization Act of 2008
(12 U.S.C. 5211 et seq.) is amended by adding after section
137 (as added by section 401 of this title) the following new
section:
``SEC. 138. CLARIFICATION OF AUTHORITY REGARDING COMMERCIAL
REAL ESTATE LOANS.
``The authority of the Secretary to take any action under
this title includes the authority to establish or support
facilities to support the availability of commercial real
estate loans, including through purchase of asset-backed
securities, directly or through the Board of Governors of the
Federal Reserve System or any Federal reserve bank.''.
TITLE V--HOPE FOR HOMEOWNERS PROGRAM IMPROVEMENTS
SEC. 501. CHANGES TO HOPE FOR HOMEOWNERS PROGRAM.
Section 257 of the National Housing Act (12 U.S.C. 1715z-
23) is amended--
(1) in subsection (e)--
(A) by striking paragraph (1);
(B) in paragraph (2)(B), by striking ``90 percent'' and
inserting ``93 percent'';
(C) by striking paragraph (7);
(D) in paragraph (9), by striking ``by procuring'' and all
that follows through ``by any other method''; and
(E) by redesignating paragraphs (2), (3), (4), (5), (6),
(8), (9), (10), and (11) as paragraphs (1), (2), (3), (4),
(5), (6), (7), (8), and (9), respectively;
(2) in subsection (h)(2), by striking ``, or in any case in
which a mortgagor fails to make the first payment on a
refinanced eligible mortgage'';
(3) by striking subsection (i) and inserting the following
new subsection:
``(i) Annual Premiums.--
``(1) In general.--For each refinanced eligible mortgage
insured under this section, the Secretary shall establish and
collect an annual premium in an amount equal to not less than
0.55 percent of the amount of the remaining insured principal
balance of the mortgage and not more than 0.75 percent of
such remaining insured principal balance, as determined
according to a schedule established by the Board that assigns
such annual premiums based upon the credit risk of the
mortgage.
``(2) Reduction or termination during mortgage term.--
Notwithstanding paragraph (1), the Secretary may provide that
the annual premiums charged for refinanced eligible mortgages
insured under this section are reduced over the term of the
mortgage or that the collection of such premiums is
discontinued at some time during the term of the mortgage, in
a manner that is consistent with policies for such reduction
or discontinuation of annual premiums charged for mortgages
in accordance with section 203(c).'';
(4) in subsection (k)--
(A) by striking the subsection heading and inserting ``Exit
Fee'';
(B) in paragraph (1), in the matter preceding subparagraph
(A), by striking ``such sale or refinancing'' and inserting
``the mortgage being insured under this section''; and
(C) by striking paragraph (2);
(5) in subsection (s)(3)(A)(ii), by striking ``subsection
(e)(1)(B) and such other'' and inserting ``such'';
(6) in subsection (v), by inserting after the period at the
end the following: ``The Board shall conform documents,
forms, and procedures for mortgages insured under this
section to those in place for mortgages insured under section
203(b) to the maximum extent possible consistent with the
requirements of this section.'';
(7) in subsection (w)(1)(C), by striking ``(e)(4)(A)'' and
inserting ``(e)(3)(A)''; and
(8) by adding at the end the following new subsection:
``(x) Payment to Existing Loan Servicer.--The Board may
establish a payment to the servicer of the existing senior
mortgage for every loan insured under the HOPE for Homeowners
Program.''.
SEC. 502. FUNDING OF INCREASED HOPE FOR HOMEOWNERS PROGRAM
CREDIT SUBSIDY COSTS.
Section 257 of the National Housing Act (12 U.S.C. 1715z-
23) is amended by adding after subsection (x) (as added by
section 501 of this title) the following new subsection:
``(y) Funding of Credit Subsidy Costs of 2009 Amendments.--
Notwithstanding section
[[Page H343]]
1338(b) of the Housing and Community Development Act of 1992
(12 U.S.C. 4568(b)) and subsection (w) of this section--
``(1) to the extent amounts are available to the Secretary
of the Treasury pursuant to section 118 of the Emergency
Economic Stabilization Act of 2008, the Secretary shall use
such amounts to cover any increase in the net costs to the
Federal Government of the HOPE for Homeowners program under
this section resulting from the amendments made by title V of
the TARP Reform and Accountability Act of 2009, and actions
authorized by title I of the Emergency Economic Stabilization
Act of 2008 shall include such use; and
``(2) any remaining net costs to the Federal Government of
the HOPE for Homeowners program under this section not
resulting from the amendments made under this title shall be
paid, and the Secretary of the Treasury shall be reimbursed
for such costs, in accordance with the provisions of such
section 1338 and subsection (w) of this section.''.
TITLE VI--HOME BUYER STIMULUS
SEC. 601. HOME BUYER STIMULUS PROGRAM.
(a) In General.--The Secretary of the Treasury (in this
title referred to as the ``Secretary'') shall carry out a
program using the authority made available by section 1117 of
the Housing and Economic Recovery Act of 2008 to stimulate
demand for home purchases and reduce unsold inventories of
residential properties, which shall include ensuring the
availability of affordable interest rates on mortgages made
for the purchase, by qualified home buyers, of 1- to 4-family
residential properties.
(b) Purchase Obligations and Securities Using HERA
Authority.--The Secretary shall execute the program under
this section through the purchase of obligations and other
securities issued by--
(1) the Federal National Mortgage Association, pursuant to
the authority under section 304(g) of the Federal National
Mortgage Association Charter Act (12 U.S.C. 1719(g)),
(2) the Federal Home Loan Mortgage Corporation, pursuant to
the authority under section 304(l) of the Federal Home Loan
Mortgage Corporation Act (12 U.S.C. 1455(l)), and
(3) any Federal Home Loan Bank, pursuant to the authority
under section 11(l) of the Federal Home Loan Bank Act (12
U.S.C. 1431(l)),
as added by section 1117 of the Housing and Economic Recovery
Act of 2008 (Public Law 110-289).
(c) Use of Loan Originators and Portfolio Lenders.--The
program under this section shall provide mechanisms to ensure
availability of such mortgages for home purchase having
affordable interest rates through financial institutions that
act as loan originators or as portfolio lenders.
(d) Availability of Affordable Loans Under HOPE for
Homeowners Program.--The Secretary, in consultation with the
Secretary of Housing and Urban Development, shall ensure that
the affordable interest rates made available through the
program under this section are made available in connection
with mortgages made for refinancing eligible mortgages, as
such term is defined in section 257 of the National Housing
Act (12 U.S.C. 1715z-23), to be insured under the HOPE for
Homeowners Program under such section.
(e) Targeting.--In carrying out the program under this
section, the Secretary may take into consideration the impact
of activities under the program on geographical areas having
the greatest number of properties with foreclosed-upon
mortgages.
TITLE VII--FDIC PROVISIONS
SEC. 701. PERMANENT INCREASE IN DEPOSIT INSURANCE.
(a) Amendments to Federal Deposit Insurance Act.--Section
11(a)(1) of the Federal Deposit Insurance Act (12 U.S.C.
1821(a)) is amended--
(1) in paragraph (1)(E), by striking ``$100,000'' and
inserting ``$250,000''
(2) in paragraph (1)(F)(i), by striking ``2010'' and
inserting ``2015'';
(3) in subclause (I) of paragraph (1)(F)(i), by striking
``$100,000'' and inserting ``$250,000'';
(4) in subclause (II) of paragraph (1)(F)(i), by striking
``the calendar year preceding the date this subparagraph
takes effect under the Federal Deposit Insurance Reform Act
of 2005'' and inserting ``calendar year 2008''; and
(5) in paragraph (3)(A)(iii), by striking ``, except that
$250,000 shall be substituted for $100,000 wherever such term
appears in such paragraph''.
(b) Repeal of EESA Provision.--Section 136 of the Emergency
Economic Stabilization Act (Public Law 110-343; 122 Stat.
3765) is hereby repealed.
(c) Amendment to Federal Credit Union Act.--Section 207(k)
of the Federal Credit Union Act (12 U.S.C. 1787(k) is
amended--
(1) in paragraph (3)--
(A) by striking the opening quotation mark before
``$250,000'';
(B) by striking ``, except that $250,000 shall be
substituted for $100,000 wherever such term appears in such
section''; and
(C) by striking the closing quotation mark after the
closing parenthesis; and
(2) in paragraph (5), by striking ``$100,000'' and
inserting ``$250,000'';
SEC. 702. EXTENSION OF RESTORATION PLAN PERIOD.
Section 7(b)(3)(E)(ii) of the Federal Deposit Insurance Act
(12 U.S.C. 1817(b)(3)(E)(ii)) is amended by striking ``5-year
period'' and inserting ``8-year period''.
SEC. 703. BORROWING AUTHORITY.
Section 14(a) of the Federal Deposit Insurance Act (12
U.S.C. 1814(a)) is amended--
(1) by striking ``$30,000,000,000'' and inserting
``$100,000,000,000''; and
(2) by inserting prior to the last sentence, the following
new sentence: ``The Corporation may request in writing to
borrow, and the Secretary may authorize and approve the
borrowing of, additional amounts above $100,000,000,000 to
the extent that the Board of Directors and the Secretary
determine such borrowing to be necessary.''.
SEC. 704. SYSTEMIC RISK SPECIAL ASSESSMENTS.
Section 13(c)(4)(G)(ii) of the Federal Deposit Insurance
Act (12 U.S.C. 1823(c)(4)(G)(ii)) is amended to read as
follows:
``(ii) Repayment of loss.--
``(I) In general.--The Corporation shall recover the loss
to the Deposit Insurance Fund arising from any action taken
or assistance provided with respect to an insured depository
institution under clause (i) from 1 or more special
assessments on insured depository institutions, depository
institution holding companies (with the concurrence of the
Secretary of the Treasury with respect to holding companies),
or both, as the Corporation determines to be appropriate.
``(II) Treatment of depository institution holding
companies.--For purposes of this clause, sections 7(c)(2) and
18(h) shall apply to depository institution holding companies
as if they were insured depository institutions.
``(III) Regulations.--The Corporation shall prescribe such
regulations as it deems necessary to implement this clause.
In prescribing such regulations, defining terms, and setting
the appropriate assessment rate or rates, the Corporation
shall consider: the types of entities that benefit from any
action taken or assistance provided under this subparagraph;
economic conditions; the effects on the industry; and such
other factors as the Corporation deems appropriate.''.
Mr. DAVIS of Illinois. Mr. Chair, I rise in strong support of the
TARP Reform and Accountability Act. This bill greatly strengthens the
safeguards for using taxpayer dollars for the TARP program. Two
provisions promise to provide critical aid to Chicago. Requiring the
Treasury to direct $100 billion to foreclosure mitigation provides hope
to the hundreds of thousands of Chicagoans and families across the
Nation who are struggling with foreclosure. Moreover, directing the
Treasury to use TARP funds to benefit small financial institutions will
help strengthen these financial institutions that play such an
important role in Chicago. Hundreds of community banks in Chicago are
teetering on collapse. These companies provide important support to
small businesses and minorities, and, as of yet, they have not received
aid from the Treasury.
I especially want to thank Chairman Frank for including language that
highlights the importance of considering consumer protections when
determining which classes of consumer loans to support. Congresswoman
Yvette Clarke and I have worked actively along with 16 other Members to
urge the Treasury and Federal Reserve to proceed cautiously when using
taxpayer funds for the student loan industry, ensuring that both
financial and consumer protections are considered. We strongly support
ensuring that students have the money they need to attend institutions
of higher education. However, we must make certain that any such plan
aids students and does not simply line the pockets of for-profit
lenders.
Certain groups of students require private student loans to attend
school. Unlike Federal student loans, private student loans typically
lack any form of consumer protection (such as fixed interest rates,
income-contingent and income-based repayment options, or debt discharge
in the case of disability or death). Moreover, private student loan
lenders enjoy Federal protections from bankruptcy that other consumer
creditors do not. Specifically, unlike other types of consumer debt,
private student loans are protected from discharge during bankruptcy
except under extreme circumstances. Thus, an individual who accumulates
thousands of dollars in debt for purchases of cars or luxury goods can
obtain relief via bankruptcy; however, a teacher with private student
loans cannot.
Given these circumstances, we hope the Treasury and Federal Reserve
will construct its student loan plan carefully to mitigate against
adverse consequences for private student loan borrowers, especially in
light of current economic conditions. Should taxpayer money be used to
support private student lenders of non-federal loans, we strongly urge
that the Treasury and Federal Reserve require consumer protections
similar to those afforded to Federal student loans as a condition of
receipt of Federal rescue funds. Federal student loans have consumer
protections; private student loans subsidized by the Treasury-Fed plan
should have such protections as well. Further, we recommend instituting
steps to assess the underwriting standards of lenders who seek Federal
relief to determine if the
[[Page H344]]
lenders extended credit to particularly vulnerable consumers and
whether credit was extended with onerous terms or conditions. Similar
to the executive compensation restrictions of the Treasury-Fed plan,
these restrictions would help focus Federal dollars on stimulating
lending while protecting taxpayers and borrowers.
I thank Chairman Frank and House leadership for developing this bill,
and I urge my colleagues to support its passage.
Mr. HOYER. Mr. Chair, last fall, at the urging of President Bush,
Treasury Secretary Paulson, and Federal Reserve Chairman Bernanke,
Congress took extraordinary action to stabilize America's financial
markets and limit the scope of an economic crisis. I know that the
Troubled Assets Relief Program (TARP) was one of the most difficult
votes that anyone in this Chamber had ever taken. But passing that bill
was the right thing to do--and even with all of the turmoil of the past
months, my mind hasn't changed.
On the other hand, I don't think anyone in this Chamber is happy with
TARP, either. As it has done so many times in the last 8 years, the
Bush administration failed to follow congressional intent when it came
to executing a law. The administration has failed to fight the wave of
foreclosures at the source of this crisis, and it did too little to
maximize the effectiveness of TARP funds in helping to restore our
economy's flow of credit. Nor did the administration adequately track
how taxpayer money was spent to ensure that banks were using it for the
intended purposes.
We cannot in good conscience approve another $350 billion request
without confidence that those failures will be remedied.
This bill strengthens accountability and oversight measures, so that
we can get necessary loans flowing again to families and businesses. It
requires detailed reports from recipients of TARP funds and ensures
that those funds un-thaw credit. It provides even stronger limits on
executive compensation, so that taxpayers can be sure their money is
not funding million-dollar Park Avenue apartments for CEOs. It
clarifies the Treasury Department's authority to use TARP funds to
benefit small financial institutions, auto companies, consumers, and
municipalities. And it insists that Treasury immediately commit $100
billion to fight foreclosures and help Americans keep their homes.
President-elect Obama has promised that ``we are going to
fundamentally change some of the practices in using this next phase of
the program.'' I agree wholeheartedly, and this bill is a strong first
step toward that change. But I also want to make clear that the same
high standards of oversight ought to apply to any administration,
Republican or Democratic. TARP funds must be watched with the same
diligence we would expect from any lender--and how much more so when
the source of the funds is the American taxpayer, when the principal
runs into twelve digits, and when the stakes are so high?
Mr. Chair, Lyndon Johnson said--in words I've quoted before on this
floor and I'm sure I'll quote again--``It's not hard to do the right
thing. It's hard to know what the right thing is.''
In this crisis, the problems are as complex as our end goal is
simple: Businesses hiring, families thriving, America growing once
again. But I am convinced that passing this bill is the right thing
today. I hope and trust that my colleagues will see it the same way.
Ms. CORRINE BROWN of Florida. Mr. Chair, I want to thank Chairman
Frank for his leadership in developing this bill. I appreciate the time
you and your staff have spent on the issues important to the American
people. You were instrumental in getting an amendment regarding tax
credits in the manager's amendment.
I want to speak on the situation today. I voted for TARP when it was
brought up last year. I am extremely disappointed as to how the banking
industry used the taxpayer funds.
The way the administration disbursed the first half of the TARP funds
was not in the interest of the American people. It was in the interest
of those who caused this crisis in the first place. The investment
bankers, and elite financiers in New York were the first in line to
claim some money and then left nothing for the people holding the bag,
the homeowners and the small businesspeople like those from my district
in Florida.
The administration moved from helping those who held mortgages that
were in foreclosure to bailing out the large banks. These banks took
that money and put it in their pockets. They paid their shareholders
and continued to pay bonuses to their executives. The banks called in
their loans and eliminated lines of credit. They bought other banks.
They closed businesses and used every legal means to get as much money
as they could. What the banking industry did was not our intent.
The Europeans used the government money to help stimulate the
economy. Every pound or euro given to banks was required to be loaned
out. As opposed to the banks here who called in loans and did away with
lines of credit.
I would like to ask Chairman Frank a couple of questions at this
time:
``Chairman Frank, I am very concerned the money we are authorizing
for the TARP program will not make it to the American people and will
not be used for what we are intending it to be used for. We need to get
money to people for (1) to end the foreclosures, of which thousands a
day are happening all over the country, (2) auto loans--people can't
get credit to buy a car and (3) school loans--the banks are calling in
the notes, prohibiting our young people from getting an education.
The American people need this money.
What protections have you included in the bill to ensure this
happens?''
Second, I have a question regarding the re-appraisal of real estate
collateral that is affecting the home builders in our country. I have
an amendment in front of the rules committee which would permit lenders
to extend or modify loan terms for home builders, so they could
continue to pay interest without forcing them to pay large sums to the
principal while in this economic crisis.
I understand this issue is not covered by this bill. What assurances
do I have that you will consider this issue in the future in your
committee?
Mr. Chairman, thank you very much for your explanations. In my
district, along with most of the country, people cannot get the loans
to consume, which is the basis for our economy. I am pleased you
included these provisions in the bill, to help small businesses all
over our country.
Thank you for your hard work on this bill, to bring relief to those
who are suffering from foreclosures and for your firm leadership on
this issue for the many years you have served the people of
Massachusetts and America.
It is important the TARP funds being spent by the Administration be
used for the benefit of the American people. From what I have seen, it
does not.
Mr. DINGELL. Mr. Chairman, I rise in support of the manager's
amendment to H.R. 384, the ``TARP Reform and Accountability Act of
2009.'' Let me begin by thanking the distinguished chairman of the
Committee on Financial Services for his fine work on H.R. 384, as well
as for his cooperation in the past in my efforts to ensure that TARP
funds were made available to the domestic automotive industry, as well
as to domestic automotive financing companies. I look forward to
working with him in the future to see that TARP funds are properly
allocated and their use and effectiveness be subject to impartial
oversight by the Congress.
As debate on the use of TARP funds has progressed, I have
consistently maintained that recipients of those funds all be subject
to uniform oversight requirements. It pleases me that the manager's
amendment to H.R. 384 includes additional public reporting requirements
for entities that have received or will receive TARP funds in the
future.
The question of oversight aside, I have also long maintained that the
root of the Nation's current economic crisis lies in the collapse of
the housing market. Too little has been done in the past year to
stabilize the market and help financially distressed homeowners. The
manager's amendment wisely addresses this problem by requiring that a
specific portion of the next tranche of TARP funds be dedicated to
mitigate foreclosures on residential mortgages within 7 days of
enactment of H.R. 384. This is of particular importance and will
hopefully be of great assistance to my State, Michigan, which
unfortunately has one of the Nation's highest foreclosure rates.
While stabilizing the housing market is a large part of the solution
to the current recession, I must reiterate my belief that the Congress
should take action to support the domestic manufacturing industry, and
in particular, our ailing automakers. I would note that foreign markets
for automobiles are contracting, and other governments are
contemplating or have already taken measures to help automakers with
production facilities in their countries. A key part of the automotive
industry's troubles in the United States is the lack of credit
available to consumers. The manager's amendment retains H.R. 384's
grant of authority to the Treasury to provide support to the financing
arms of automakers, which will in turn allow consumers and businesses
access to previously unavailable lines of credit for the purchase of
new vehicles. I voice my wholehearted support for this sensible
provision, especially as the collective future of our automakers is
tied directly to the health of their financing arms.
I would again thank the chairman for his gracious cooperation in the
past on this and many other issues. The manager's amendment contains
prudent measures to improve oversight and administration of the
Troubled Asset Relief Program, and I would urge my colleagues to
support its passage.
The Acting CHAIR. No amendment to the bill is in order except those
printed in House Report 111-3. Each
[[Page H345]]
amendment may be offered only in the order printed in the report, by a
Member designated in the report, shall be considered read, shall be
debatable for the time specified in the report, equally divided and
controlled by the proponent and an opponent of the amendment, shall not
be subject to amendment, and shall not be subject to a demand for
division of the question.
Amendment No. 1 Offered by Mr. Frank of Massachusetts
The Acting CHAIR. It is now in order to consider amendment No. 1
printed in House Report 111-3.
Mr. FRANK of Massachusetts. I rise to offer that amendment, Mr.
Chairman.
The Acting CHAIR. The Clerk will designate the amendment.
The text of the amendment is as follows:
Amendment No. 1 offered by Mr. Frank of Massachusetts:
Page 3, line 16, after the period insert the following:
``Such reporting may be required directly for nondepository
institutions or through the appropriate Federal banking
agency, as provided in section 103.''.
Page 4, line 15, strike ``As'' and insert ``Except as
provided in section 105, as''.
Page 4, line 18, before the second comma insert ``made
after the date of the enactment of the TARP Reform and
Accountability Act of 2009''.
Page 5, line 1, strike ``funding'' and insert
``assistance''.
Page 5, line 10, strike ``funds'' and insert
``assistance''.
Page 6, line 23, strike ``funds'' and insert
``assistance''.
Page 7, after line 11, insert the following:
(4) Renter protection.--In the case of any foreclosure on
any dwelling or residential real property securing an
extension of credit made under a contract entered into after
the date of the enactment of this Act, any successor in
interest in such property pursuant to the foreclosure shall
assume such interest subject to--
(A) the provision, by the successor in interest, of a
notice to vacate to any bona fide tenant at least 90 days
before the effective date of the notice to vacate; and
(B) the rights of any bona fide tenant, as of the date of
such notice of foreclosure--
(i) under any bona fide lease entered into before the
notice of foreclosure to occupy the premises until the end of
the remaining term of the lease or the end of the 6-month
period beginning on the date of the notice of foreclosure,
whichever occurs first, subject to the receipt by the tenant
of the 90-day notice under subparagraph (A); or
(ii) without a lease or with a lease terminable at will
under State law, subject to the receipt by the tenant of the
90-day notice under subparagraph (A).
(5) Bona fide lease or tenancy.--For purposes of this
paragraph (1), a lease or tenancy shall be considered bona
fide only if--
(A) the mortgagor under the contract is not the tenant;
(B) the lease or tenancy was the result of an arms-length
transaction; or
(C) the lease or tenancy requires the receipt of rent that
is not substantially less than fair market rent for the
property.
Page 7, line 14, strike ``may permit an'' and insert
``shall permit an assisted''.
Page 7, line 18, before the first period insert the
following: ``, and when such assistance is repaid, the
Secretary shall liquidate warrants associated with such
assistance at the current market price''.
Page 8, line 6, strike ``means'' and insert ``mean''.
Page 8, strike lines 19 through 21 and insert the
following:
``(1) Standards required.--Notwithstanding any''.
Page 8, line 25, strike ``assisted institution'' and insert
``institution that became an assisted institution after the
date of the enactment of the TARP Reform and Accountability
Act of 2009''.
Page 9, lines 6 through 8, strike ``an assisted institution
which received assistance under this title'' and insert
``such institution''.
Page 10, strike lines 5 through 16.
Page 10, line 17, strike ``(4)'' and insert ``(3)''.
Page 10, line 23, strike ``on or after'' and insert
``before''.
Page 12, line 24, before the first period, insert ``, and
shall require such reports to be provided to the appropriate
State bank supervisor (as defined in section 3 of the Federal
Deposit Insurance Act)''.
Page 13, line 4 and 5, strike ``striking paragraph (1) and
inserting'' and inserting ``adding at the end''.
Strike line 6 on page 13 and all that follows through page
16, line 18, and insert the following:
``(4) Amount.--For assistance provided after the date of
the enactment of the TARP Reform and Accountability Act of
2009, and except as provided in title III of such Act, the
warrants or instruments described in this section shall have
a value at least equal to 15 percent of the aggregate amount
of such assistance.''.
Strike line 23 on page 16 and all that follows through page
17, line 2.
Page 17, line 6, strike ``make available funds'' and insert
``provide assistance''.
Page 17, line 8, before the period insert ``, including
such institutions that are privately held''.
Page 17, strike lines 9 through 12 and insert the
following:
(b) Comparable Terms.--An institution that receives
assistance after the date of the enactment of the TARP Reform
and Accountability Act of 2009, shall do so on terms
comparable to the terms applicable to institutions that
received assistance prior to the date of the enactment of
such Act of 2009: Provided, That the institution--
Page 17, line 13, strike ``have submitted applications''
and inserting ``has submitted an application''.
Page 17, line 18, strike ``are'' and insert ``is''.
Page 17, line 25, strike the comma and insert a period.
Page 18, strike lines 1 through 3.
Page 19, after line 12, insert the following:
SEC. 107. INCLUSION OF WOMEN AND MINORITIES.
(a) Office of Minority and Women Inclusion.--The Secretary
of the Treasury shall establish an Office of Minority and
Women Inclusion, or designate an office of the entity, that
shall be responsible for carrying out this section and
ensuring compliance by the Secretary and each assisted
institution (as such term is defined in section 3 of the
Emergency Economic Stabilization Act of 2008) with the
requirements of this section. The Office shall be responsible
for all matters of the entity relating to diversity in
management, employment, and business activities in accordance
with such standards and requirements as the Secretary shall
establish regarding the use of assistance provided under
title I of such Act.
(b) Inclusion in All Levels of Business Activities.--The
Secretary and each assisted institution shall develop and
implement standards and procedures to ensure, to the maximum
extent possible, the inclusion and utilization of minorities
(as such term is defined in section 1204(c) of the Financial
Institutions Reform, Recovery, and Enforcement Act of 1989
(12 U.S.C. 1811 note)) and women, and minority- and women-
owned businesses (as such terms are defined in section
21A(r)(4) of the Federal Home Loan Bank Act (12 U.S.C.
1441a(r)(4)) (including financial institutions, investment
banking firms, mortgage banking firms, asset management
firms, broker-dealers, financial services firms,
underwriters, accountants, brokers, investment consultants,
and providers of legal services) in all business and
activities of the Secretary and each assisted institution at
all levels, including in procurement, insurance, and all
types of contracts (including contracts for the issuance or
guarantee of any debt, equity, or mortgage-related
securities, the management of its mortgage and securities
portfolios, the making of its equity investments, the
purchase, sale and servicing of single- and multi-family
mortgage loans, and the implementation of its affordable
housing program and initiatives). The processes established
by the Secretary and each assisted institution for review and
evaluation for contract proposals and to hire service
providers shall include a component that gives consideration
to the diversity of the applicant.
(c) Applicability.--This section shall apply to all
contracts of the Secretary of the Treasury and assisted
institutions for services of any kind, including services
that require the services of investment banking, asset
management entities, broker-dealers, financial services
entities, underwriters, accountants, investment consultants,
and providers of legal services.
(d) Reports to Congress.--Not later than 180 days after the
date of the enactment of this Act, the Secretary shall report
to the Congress detailed information describing the actions
taken by the Office and assisted institutions pursuant to
this section, which shall include a statement of the total
amounts provided by the Secretary and assisted institutions
under title I of the Emergency Economic Stabilization Act of
2008 to third party contractors since the last such report
and the percentage of such amounts paid to businesses
described in subsection (b) of this section.
SEC. 108. ANALYSIS OF USE OF ASSISTANCE.
(a) Requirement.--The Secretary of the Treasury shall
regularly analyze timely and detailed information concerning
the use of assistance provided under title I of the Emergency
Economic Stabilization Act of 2008 by assisted institutions
to ensure that the program established under title I of such
Act is meeting the goals of the program.
(b) Agency Collection.--The Secretary of the Treasury shall
require the Federal banking agencies (as defined in section 3
of the Federal Deposit Insurance Act) and any other Federal
agency the Secretary chooses to report detailed information
to the Secretary on the use of assistance provided by the
Secretary under the Emergency Economic Stabilization Act of
2008 in a standard electronic form on no less than a
quarterly basis.
(c) Source of Information.--The data collected and analyzed
under subsections (a) and (b)--
(1) shall come from existing reports filed by all assisted
institutions where possible, including depository
institutions and nondepository institutions, with the
principal Federal regulator of each such institution, if any;
and
(2) and should be sufficiently detailed and timely to
enable the Secretary to determine the effectiveness of the
program established
[[Page H346]]
under title I of the Emergency Economic Stabilization Act of
2008 in stimulating prudent lending and strengthening bank
capital.
(d) Adjustments and Recommendations.-- If the Secretary of
the Treasury determines that--
(1) the goals of the program established under title I of
the Emergency Economic Stabilization Act of 2008 are not
being met, the Secretary shall work with the Federal agencies
supplying the information under subsection (b) to encourage
such agencies to provide the recipients of assistance under
such title with recommendations for better meeting the goals
of the program; and
(2) the goals of the program are not being met following
the recommendations and adjustments made in accordance with
paragraph (1), the Secretary shall adjust the future uses of
assistance provided under such title.
SEC. 109. DATABASE OF USE OF TARP FUNDS.
The Secretary of the Treasury shall create and maintain a
fully searchable database, accessible on the Internet at no
cost to the public, that contains the name of each entity
receiving funds made available under section 115(a) of the
Emergency Economic Stabilization Act of 2008 (12 U.S.C.
5225(a)) and the purpose for which such entity is receiving
such funds.
Page 19, line 13, strike ``107'' and insert ``110''.
Page 19, line 16, strike ``subsection'' and insert
``subsections''.
Page 19, line 20, strike the quotation marks and the last
period.
Page 19, line after line 20, insert the following:
``(g) Qualified Property.--
``(1) Guarantee.--Upon the request of a lessee of qualified
property in leases where the lessee economically defeased its
rent and purchase option payments, the Secretary may serve as
a guarantor with respect to all payment obligations of such
lessee with respect to any defeased lease transaction that is
in technical default because of a downgrade of a financial
guarantor. Such guarantee shall be on such terms and
conditions as are determined by the Secretary.
``(2) Definitions.--For purposes of this subsection, the
following definitions shall apply:
``(A) Qualified property.--The term `qualified property'
means domestic property subject to a lease entered into prior
to November 1, 2007, in which a State or local government
authority (as defined in section 5302(a) of title 49, United
States Code) is the lessee.
``(B) Guarantor.--The term `guarantor' includes any
guarantor, surety, and payment undertaker.''.
Page 20, before line 1 insert the following new section:
SEC. 111. INVESTMENT OF TARP FUNDS IN CREDIT UNIONS TAKEN
INTO ACCOUNT IN DETERMINATION OF NET WORTH.
(a) In General.--Section 216(o)(2) of the Federal Credit
Union Act (12 U.S.C. 1790d(o)(2)) is amended by striking
subparagraph (A) and inserting the following new
subparagraph:
``(A) with respect to any insured credit union, means--
``(i) the retained earnings balance of the credit union, as
determined under generally accepted accounting principles,
together with any amounts that were previously the retained
earnings of any other credit union with which the credit
union has combined; and
``(ii) any donated equity, permanent, and perpetual capital
deposits, or other primary capital made available under Title
I of the Emergency Economic Stabilization Act of 2008, as
determined by regulation or order of the Board with due
regard for the accepted capital standards for United States
depository institutions generally; and''.
(b) Effective Date.--The amendment made by subsection (a)
shall take effect at the end of the 30-day period beginning
on the date of the enactment of this Act.
SEC. 112. TREASURY FACILITATED AUCTION.
Section 113(b) of the Emergency Economic Stabilization Act
of 2008 (12 U.S.C. 5223(b)) is amended to read as follows:
``(b) Use of Market Mechanisms.--
``(1) In general.--In making purchases under this Act, the
Secretary shall--
``(A) make such purchases at the lowest price that the
Secretary determines to be consistent with the purposes of
this Act; and
``(B) maximize the efficiency of the use of taxpayer
resources by using market mechanisms, including auctions or
reverse auctions, where appropriate.
``(2) Auction facilitation.--
``(A) In general.--The Secretary shall, in coordination
with institutions that volunteer to participate, and not
using any funds under this title for purchases, facilitate an
auction of troubled assets owned by such institutions to
third party purchasers.
``(B) Report.--If the auction described in subparagraph (A)
does not take place within the 3 month period following the
date of the enactment of the TARP Reform and Accountability
Act of 2009, the Secretary shall issue a report to the
Congress stating--
``(i) why such auction has not taken place; and
``(ii) by what mechanism the Secretary feels that troubled
assets could most expeditiously be valued and liquidated.''.
Page 20, after line 4, insert the following:
(a) Commitment of Resources.--Notwithstanding any provision
of title I of the Emergency Economic Stabilization Act of
2008, not later than seven days after the date of the
enactment of the TARP Reform and Accountability Act of 2009,
the Secretary of the Treasury (in this title referred to as
the ``Secretary'') shall commit funds made available to the
Secretary under title I of the Emergency Economic
Stabilization Act of 2008 in an amount of at least
$100,000,000,000, unless the Secretary certifies otherwise
under subsection (d), but in no case less than
$40,000,000,000, for the purposes of foreclosure mitigation.
Not less than $20,000,000,000 of this amount shall be
dedicated to the program described under section 204 of this
Act. The Secretary shall consult with the Chairperson of the
Board of Directors of the Federal Deposit Insurance
Corporation regarding the administration of the program.
Page 20, line 5, strike ``(a)'' and insert ``(b)''.
Page 20, strike ``of the Treasury'' in line 8 and all that
follows through `` `Secretary')'' in line 9.
Page 20, line 11, after ``to'' insert ``use the funds
committed under subparagraph (a) to''.
Page 20, strike lines 16 through 21.
Strike ``committing funds'' in line 23 of page 20 and all
that follows through ``of 2008'' on page 21, line 1.
Page 21, line 2, strike ``(a)'' and insert ``(b)''.
Page 21, line 3, strike ``by May 1, 2009,''.
Page 21, lines 4 and 5, strike ``more than the minimum of
$40,000,000,000 as required'' and insert ``at least
$100,000,000,000 in the plan established''.
Page 21, lines 6 and 7, strike ``, no later than May 15,
2009,'' and insert ``in the plan''.
Page 21, line 7, strike ``additional funds'' and insert
``amounts''.
Page 21, after line 8, insert the following:
(e) Clarification.--For purposes of this title, the term
``residential properties'' shall include 1- to 4-family
residential properties.
Page 21, line 11, strike ``201(a)'' and insert ``201(b)''.
Page 21, lines 23 and 24, strike ``one, or a combination
of more than one,'' and insert ``the systematic foreclosure
prevention and mortgage modification program under section
204 and a combination''.
Page 21, after line 25, insert the following:
(4) Workforce and outreach.--The plan shall set forth how
the Secretary intends to develop, second, or contract for
appropriate staffing to carry out the plan and the component
programs and to ensure that private mortgage servicers
utilizing the programs established by the Secretary will
provide sufficient staffing and resources to engage in the
outreach, loss mitigation activities, and homeowner education
necessary for successful foreclosure mitigation.
Page 22, line 2, strike ``201(a)'' and insert ``201(b)''.
Page 22, strike lines 9 through 11.
Page 22, line 12, strike ``(2)'' and insert ``(1)''.
Page 22, line 23, strike ``(3)'' and insert ``(2)''.
Page 23, line 8, strike ``(4)'' and insert ``(3)''.
Page 23, line 13, strike ``(5)'' and insert ``(4)''.
Page 23, line 10, after ``servicers'' insert the following:
`` ``, including servicers that are not affiliated with a
depository institution,''.
Page 23, line 19, after ``Corporation'' insert ``, regional
public-private partnerships,''.
Page 23, after line 22, insert the following:
(5) Substitution of trust.--A program under which
modifications are allowed to the securitization trust
agreements with respect to securities secured by pools of
mortgages to allow a new qualified buyer to be substituted on
a foreclosed property or a delinquent mortgage without
seeking new financing.
Page 24, line 18, after ``with'' insert ``the Chairperson
of the Federal Deposit Insurance Corporation and''.
Page 27, line 19, strike ``201(a)'' and insert ``201(b)''.
Page 28, line 3, strike ``118'' and insert ``title I''.
Page 28, line 12, strike ``204'' and insert ``205''.
Page 28, line 18, strike ``201(a)'' and insert ``201(b)''.
Page 29, line 1, strike ``205'' and insert ``206''.
Strike line 21 on page 31 and all that follows through page
32, line 2.
Page 32, line 3, strike ``(c)'' and insert ``(b)''.
Page 32, line 10, strike ``(d)'' and insert ``(c)''.
Page 32, after line 19, insert the following:
SEC. 207. FORECLOSURE PREVENTION FOR AFFORDABLE HOUSING.
Section 109 of the Emergency Economic Stabilization Act of
2008 (12 U.S.C. 5219) is amended to read as follows:
``SEC. 109. FORECLOSURE MITIGATION EFFORTS.
``(a) Residential Mortgage Servicing Standards.--To the
extent that the Secretary acquires mortgages, mortgage backed
securities, and other assets secured by residential real
estate, including multifamily housing, the Secretary shall
implement a plan that seeks to maximize assistance for
homeowners and renters and use the authority of the Secretary
to encourage the servicers of the underlying mortgages,
considering net present value to the taxpayer, to take
advantage of the HOPE for Homeowners Program under section
257 of the National Housing Act or other available programs
to minimize foreclosures. In addition, the Secretary may use
loan guarantees and
[[Page H347]]
credit enhancements to facilitate loan modifications to
prevent avoidable foreclosures on single-family and
multifamily housing.
``(b) Coordination.--The Secretary shall coordinate with
the Corporation, the Board (with respect to any mortgage or
mortgage-backed securities or pool of securities held, owned,
or controlled by or on behalf of a Federal reserve bank, as
provided in section 110(a)(1)(C)), the Federal Housing
Finance Agency, the Secretary of Housing and Urban
Development, and other Federal Government entities that hold
troubled assets to attempt to identify opportunities for the
acquisition of classes of troubled assets that will improve
the ability of the Secretary to improve the loan modification
and restructuring process and, where permissible, to permit
bona fide tenants who are current on their rent to remain in
their homes under the terms of the lease. In the case of a
mortgage on a residential rental property, including a
qualified low-income building under section 42 of the
Internal Revenue Code of 1986, the plan required under this
section shall include protecting Federal, State, and local
rental subsidies and protections, and ensuring any
modification takes into account the need for operating funds
to maintain decent and safe conditions at the property.
``(c) Consent to Reasonable Loan Modification Requests.--
Upon any request arising under existing investment contracts,
the Secretary shall consent, where appropriate and
considering net present value to the taxpayer, to reasonable
requests by homeowners and owners of multifamily housing,
including qualified low-income buildings under section 42 of
the Internal Revenue Code of 1986, for loss mitigation
measures, including term extensions, rate reductions,
principal write downs, increases in the proportion of loans
within a trust or other structure allowed to be modified, or
removal of other limitation on modifications.''.
Page 32, line 20, strike ``206'' and insert ``208''.
Page 33, after line 6, insert the following (and conform
the Table of Contents accordingly):
SEC. 209. MORTGAGE MODIFICATION DATA COLLECTING AND
REPORTING.
(a) Reporting Requirements.--Not later than 120 days after
the date of the enactment of this Act, and quarterly
thereafter, the Comptroller of the Currency, in coordination
with the Director of the Office of Thrift Supervision, shall
submit a report to the Committee on Banking, Housing, and
Urban Affairs of the Senate, the Committee on Financial
Services of the House of Representatives, and the Joint
Economic Committee on the volume of mortgage modifications
reported to the Office of the Comptroller of the Currency and
the Office of Thrift Supervision, under the mortgage metrics
program of each such Office, during the previous quarter,
including the following:
(1) The total number of mortgage modifications resulting in
each of the following:
(A) Additions of delinquent payments and fees to loan
balances.
(B) Interest rate reductions and freezes.
(C) Term extensions.
(D) Reductions of principal.
(E) Deferrals of principal.
(F) Combinations of modifications described in subparagraph
(A), (B), (C), (D), or (E).
(2) The total number of mortgage modifications in which the
total monthly principal and interest payment resulted in the
following:
(A) An increase.
(B) Remained the same.
(C) Decreased less than 10 percent.
(D) Decreased 10 percent or more.
(b) Data Collection.--
(1) Required.--
(A) In general.--Not later than 60 days after the date of
the enactment of this Act, the Comptroller of the Currency
and the Director of the Office of Thrift Supervision, shall
issue mortgage modification data collection and reporting
requirements to institutions covered under the reporting
requirement of the mortgage metrics program of the
Comptroller or the Director.
(B) Inclusiveness of collections.--The requirements under
subparagraph (A) shall provide for the collection of all
mortgage modification data needed by the Comptroller of the
Currency and the Director of the Office of Thrift Supervision
to fulfill the reporting requirements under subsection (a).
(2) Report.--The Comptroller of the Currency shall report
all requirements established under paragraph (1) to each
committee receiving the report required under subsection (a).
Page 52, strike ``obligation'' in line 19 and all that
follows through ``2008'' in line 21 and insert ``existing
vested legal rights and the Constitution''.
Page 63, line 9, after the first period insert the
following: ``In determining which classes of consumer loans
to support, the Secretary may consider the applicable
regulatory structure and level of consumer protection
afforded to such loans.''.
Page 63, line 11, strike ``103'' and insert ``101''.
Page 63, line 13, strike ``(f)'' and insert ``(g)''.
Page 63, line 13, strike ``401'' and insert ``110''.
Page 63, line 15, strike ``(g)'' and insert ``(h)''.
Page 64, line 8, before the first period insert the
following: ``or any other entity eligible to issue bonds the
interest on which is excludable from gross income for Federal
income tax purposes.''.
Page 64, line 19, after ``estate loans,'' insert
``including loans for multifamily housing,''.
Page 64, after line 22, insert the following new sections:
SEC. 404. SMALL BUSINESS LOANS.
Title I of the Emergency Economic Stabilization Act of 2008
(12 U.S.C. 5211 et seq.) is amended by adding after section
138 (as added by section 403 of this title) the following new
section:
``SEC. 139. CLARIFICATION OF AUTHORITY REGARDING SMALL
BUSINESS LOANS.
``The authority of the Secretary to take any action under
this title includes the authority to establish or support
facilities to support the availability of small business
loans, including farm loans, loans to minority and
disadvantaged businesses, debtor-in-possession financing,
dealer floor plan financing, and any other small business
loans, including through purchase of asset-backed securities,
directly or through the Board or any Federal reserve bank.''.
SEC. 405. COMMERCIAL LOANS.
Title I of the Emergency Economic Stabilization Act of 2008
(12 U.S.C. 5211 et seq.) is amended by adding after section
139 (as added by section 404 of this title) the following new
section:
``SEC. 140. CLARIFICATION OF AUTHORITY REGARDING COMMERCIAL
LOANS.
``The authority of the Secretary to take any action under
this title includes the authority to establish or support
facilities to support the availability of commercial loans,
including through purchase of asset-backed securities,
directly or through the Board or any Federal reserve bank.''.
SEC. 406. AUTOMOBILE FLEET PURCHASE LOANS.
Title I of the Emergency Economic Stabilization Act of 2008
(12 U.S.C. 5211 et seq.) is amended by adding after section
140 (as added by section 405 of this title) the following new
section:
``SEC. 140. CLARIFICATION OF AUTHORITY REGARDING AUTOMOBILE
FLEET PURCHASE LOANS.
``The authority of the Secretary to take any action under
this title includes the authority to establish or support
facilities to support the availability of automobile fleet
purchase loans, including loans for the automobile rental
industry and other fleet purchasers, including through
purchase of asset-backed securities, directly or through the
Board or any Federal reserve bank.''.
SEC. 407. CERTIFICATION.
Subsection (a) of section 105 of the Emergency Economic
Stabilization Act of 2008 (12 U.S.C. 5215(a)) is amended--
(1) in paragraph (2), by striking ``and'' at the end;
(2) in paragraph (3), by striking the period at the end and
inserting ``; and''; and
(3) by adding at the end the following new paragraph:
``(4) the use of the authority for the purposes specified
in the amendments made by title IV of the TARP Reform and
Accountability Act of 2009.''.
Strike line 1 on page 68 and all that follows through page
69, line 2.
Page 69, line 7, strike ``carry out'' and insert
``establish and implement, within 60 days of the date of the
enactment of the TARP Reform and Accountability Act of
2009,''.
Page 69, lines 8 and 9, strike ``using the authority made
available by section 1117 of the Housing and Economic
Recovery Act of 2008''.
Page 69, lines 11 and 12, strike ``which shall include
ensuring'' and insert ``by providing mechanisms to ensure''.
Page 69, line 12, after ``affordable'' insert ``, below-
market''.
Strike line 15 on page 69 and all that follows through page
70, line 13, and insert the following:
(b) Implementation.--The Secretary shall execute the
program under this section using the authority to purchase
obligations and other securities issued by the Federal
National Mortgage Association, the Federal Home Loan Mortgage
Corporation, and the Federal Home Loan Banks made available
by the Housing and Economic Recovery Act of 2008 and such
other authority as the Secretary may have (other than that
provided by title I of the Emergency Economic Stabilization
Act of 2008) to make affordable, below-market interest rates
available directly through portfolio lenders.
Page 70, line 14, strike ``(d)'' and insert ``(c)''.
Page 70, line 17, after ``affordable'' insert ``, below-
market''.
Strike line 24 on page 70 and all that follows through page
71, line 3, and insert the following:
(e) Targeting for Housing Disaster Areas.--
(1) In general.--In carrying out the program under this
section, the Secretary shall take into consideration impact
of activities under the program on housing disaster areas.
(2) Report.--Not later than 60 days after the Secretary
first has authority to purchase troubled assets pursuant to
section 115(a)(3) of the Emergency Economic Stabilization Act
of 2008 (12 U.S.C. 5225(a)(3)), the Secretary shall--
(A) evaluate the impact of existing Federal foreclosure
prevention activities on housing disaster areas;
(B) make a determination of whether the foreclosure rates
and anticipated default rates in such areas have been
adequately reduced; and
[[Page H348]]
(C) submit a report to the Congress that describes the
impact of such activities and the determination of the
Secretary under subparagraph (B).
(3) Alternative proposals.-- If the Secretary determines
that the foreclosure rates and anticipated default rates in
housing disaster areas have not been adequately reduced, the
Secretary shall--
(A) consider carrying out alternative proposals, including
a proposal under which the Federal Government makes available
affordable mortgages, including refinancings, through
subsidized financing or mortgage purchases; and
(B) establish and carry out alternative programs as the
Secretary considers necessary to ensure that foreclosure
prevention efforts are most effective in the areas of
greatest need, including housing disaster areas.
(4) Housing disaster areas.--For purposes of this section,
the term ``housing disaster area'' means a geographic area
having both--
(A) a high foreclosure rate during the 12 months preceding
the date of the enactment of this Act, as measured by
percentages of homes in or having gone through foreclosure
during such period and compared to other areas; and
(B) a substantial decline in home prices during the 12
months preceding the date of the enactment of this Act, as
measured by the Office of Federal Housing Enterprise and
Oversight and compared to other areas.
Page 72, line 20, strike ``1814(a)'' and insert
``1824(a)''.
At the end of the bill, add the following new title:
TITLE VIII--REPORTS ON THE GUARANTEE OF CERTAIN CITIGROUP ASSETS
SEC. 801. REPORTS REQUIRED.
(a) Treasury Reports.--Not later than 30 days after the
date of the enactment of this Act, the Secretary of the
Treasury, in coordination with the Chairperson of the Board
of Directors of the Federal Deposit Insurance Corporation,
shall issue a report to the Committee on Financial Services
of the House of Representatives, the Committee on Banking of
the Senate, and to the Comptroller General of the United
States containing the following:
(1) The authority under which the Citigroup guarantee and
purchases were made.
(2) A complete accounting of the specific loans,
securities, and any other financial instruments in the asset
pool covered by the Citigroup guarantee.
(b) GAO Report.--Not later than 60 days after the date the
Secretary of the Treasury issues the report required by
subsection (a), the Comptroller General of the United States
shall issue a report to the Committee on Financial Services
of the House of Representatives and the Committee on Banking
of the Senate examining the probable long-term cost to the
Federal Government of the Citigroup guarantee.
(c) Citigroup Guarantee Defined.--For the purpose of this
section, the term ``Citigroup guarantee'' means the agreement
announced November 23, 2008, between Citigroup and the
Treasury and the Federal Deposit Insurance Corporation to
guarantee or purchase, partly through the use of funds
authorized under the Emergency Economic Stabilization Act of
2008 (12 U.S.C. 5201 et seq.), an asset pool of approximately
$306 billion of loans and securities backed by residential
and commercial real estate and other such assets on
Citigroup's balance sheet.
TITLE IX--GAO STUDY OF FINANCIAL CRISIS
SEC. 901. STUDY REQUIRED.
The Comptroller General of the United States shall--
(1) conduct an in-depth study of the root causes of the
financial crisis; and
(2) submit a report to the Congress and the President, and
transmit a copy to the Secretary of the Treasury, containing
the findings and conclusions of the Comptroller General with
respect to the study under paragraph (1), together with such
recommendations for legislative and administrative action as
the Comptroller General may determine to be appropriate
before the end of the 6-month period beginning on the date of
the enactment of this Act.
SEC. 902. TREASURY STRATEGY AND TIMELINE.
Using the findings and conclusions of the Comptroller
General in the report under section 901(2), within 30 days,
the Secretary of the Treasury shall issue an overall strategy
and timeline for implementing the recommendations contained
in the report with the goal of financial stability and the
well-being of taxpayers.
The Acting CHAIR. Pursuant to House Resolution 62, the gentleman from
Massachusetts (Mr. Frank) and a Member opposed each will control 20
minutes.
The Chair recognizes the gentleman from Massachusetts.
{time} 1115
Mr. FRANK of Massachusetts. Mr. Chairman, I yield myself such time as
I may consume.
Mr. Chairman, when we determined that because the President was going
to be triggering this request we should act on this bill, we sent out a
notice to all Members inviting amendments. We received a large number
of amendments and we agreed that many of them made a great deal of
sense. Some of them we think clarify what was already the intention of
the bill. This amendment includes a variety of those. There will be
Members here on the floor who want to talk about it.
For example, you heard the gentleman from Kansas (Mr. Moran) talk
about the removal of the provision that would have restricted the use
of private aircraft. That is one of the things that is in here. There
are other things that are important to various Members who will be
addressing them. They aim at enforcing better the accountability and
essentially increasing some of the restrictions on the recipient
institutions. I will be discussing these and other matters with some
other Members.
At this point, I reserve the balance of my time.
Mr. GARRETT of New Jersey. Mr. Chairman, I claim the time in
opposition.
The Acting CHAIR. The gentleman is recognized for 20 minutes.
Mr. GARRETT of New Jersey. Mr. Chairman, I yield myself such time as
I may consume.
Mr. Chairman, just before this meeting out here on the floor, I was
in my office back in Cannon meeting with and on the phone with
constituents back at home discussing the fact of the difficult plight
we find ourselves and the economy in in this country right now,
specifically with regard to homeowners, the problems that they are
having with paying their mortgages and the like, the difficulty overall
with the economy, with the rising unemployment rates, the problems in
the credit markets and the like.
The question they ask, of course, is what is Congress about to do
with this situation. The conversation always turns around to what has
Congress done in the first place, and, of course, we know what that is.
Several months ago, I guess it was in September, this Congress was
told by the administration and agreed to by the other side of the aisle
that unless Congress acted expeditiously, the sky was going to fall in,
and that what Congress had to do was authorize and appropriate $700
billion to bail out the situation.
Well, we have since that time spent $350 billion of that sum, and the
callers that I heard from from home that I was just referring to before
are saying, what did it achieve? What did we accomplish? Unemployment
is still high, the housing market is still tight, home prices are still
falling, and all that we really did was to bail out Wall Street, is the
way some people couch it.
The question then comes up, how did we go through that process. I
have to tell the people back at home, not in a very transparent and
open manner. Quite honestly, it was in a rushed matter. We rushed
through a piece of legislation that started out at three pages and then
turns out to well over 100, without a single hearing, without a single
markup, without a single discussion really in committee as to whether
there would be transparency and accountability and the like.
Well, sir, now we are about to do the same thing next week, I
understand, when President-elect Obama has requested that we spend the
next $350 billion, again without the appropriate oversight. So I
commend the chairman for taking the step to try to begin to begin the
process of providing some of that degree of accountability,
transparency and oversight.
But I do raise the same question that the people asked me on the
phone today that I was talking to: Why are we rushing to judgment on
it? Why are we going through it in the same manner, the same failed
policy reasons, the same procedural manner that we did before, without
a hearing, without a discussion, without a markup in committee, so that
both sides of the aisle could come together with their good ideas in
order to achieve what the American public wants, to right the economy,
to not put the taxpayer on a hook, and to do so that the taxpayer is
protected. Why are we doing it in the same failed policy procedure we
did in the past without that ability for input?
Now, the chairman will say, well, we have ability because the Rules
Committee allowed a number of amendments. We will be debating those
amendments shortly, 10 or 11 amendments I believe we will have at that
point in time.
[[Page H349]]
The chairman will agree that is not the best way to achieve what we
are trying to for the American people. The best way is to have an open,
honest discussion in committee, allow the experts to come in and
testify, allow Members from both sides of the aisle to have input, and
allow it to go through the committee to get that desired result.
That was not done with TARP 1, that really is not being done with
TARP 2. So I rise in opposition to this failed policy and procedure
that we are doing here today as well.
With that, I reserve the balance of my time.
Mr. FRANK of Massachusetts. Mr. Chairman, I first yield myself 30
seconds to correct the gentleman from New Jersey.
The gentleman from New Jersey said that President Obama was
requesting these funds. In fact, President Bush requested the funds. He
did it after President-elect Obama asked him to, but I think it ought
to be clear on the record, this is a continuation of the Bush policy
and it was President Bush who in fact requested the funds. President
Obama could not request them until next week. The President did it at
the request of the President-elect, but it was President Bush who did
it.
I now yield 2 minutes to the gentleman from Rhode Island (Mr.
Kennedy).
(Mr. KENNEDY asked and was given permission to revise and extend his
remarks.)
Mr. KENNEDY. Thank you, Mr. Chairman. I rise to engage the chairman
in a colloquy.
Mr. Chairman, I am extremely concerned at the current state of
affairs with credit card regulations as my constituents see these
extraordinary interest rates affecting their credit cards. I am
appalled that companies continue to engage in predatory practices, like
double-cycle billing and inadequate notification periods and
retroactive rate hikes for these credit cards.
I am seeing these predatory practices continue, in spite of the fact
that the Federal Reserve has recently finalized a rule that will ban
many of these predatory practices. Unfortunately, these reforms are not
scheduled to go into place until July 2010, and then they will save our
consumers over $10 billion a year.
I think it would be outrageous to see us bail out these banks, and
yet see them also continue to gouge these consumers of ours, these
taxpayers at the other end of the ledger on these predatory practices.
I would like to work with the chairman to see that we address this
issue in forthcoming legislation.
Mr. FRANK of Massachusetts. If the gentleman will yield, as he knows,
because he was a strong supporter, the Committee on Financial Services,
once we became the majority, in fact put through this House a bill that
was even tougher in some ways than what the Federal Reserve did, and I
think was the spur to the Federal Reserve acting. Unfortunately, it
wasn't acted on in the Senate, but I thought it was good that we passed
it. I know there are Members who say if we can't know the Senate is
going to pass something, we shouldn't even try. We have rejected that.
We did pass that bill.
The gentlewoman from New York (Mrs. Maloney) has been a leader here.
She will be bringing that bill up again, and we want to apply those
principles not just to TARP recipients, but to all credit card
companies. We expect to do it quickly. The gentleman is absolutely
right. We should not wait until 2010. I hope that we will have this
bill on the floor by March, and we will be able, and the gentleman's
input has been very helpful to us, to pass this bill that will become
law very soon.
Mr. KENNEDY. I want to salute the gentleman for the transparency and
accountability standards that he has in the manager's amendment, and
encourage additional funds to go to the foreclosure problem that he has
identified in his manager's amendment.
Mr. GARRETT of New Jersey. Mr. Chairman, I yield myself such time as
I may consume.
It is interesting to find out that our chairman, who oftentimes
berates our side of the aisle for distancing ourselves from our
President, now I find that he is already distancing himself from the
President-to-be, President-elect Obama.
While he is correct while being overly technical about it by saying
that it was President Bush who actually filed the paperwork and made
the submission to this House and to the Congress in order for the
request of the additional TARP funds, he seems to be distancing himself
from his party's candidate and his party's and all this Nation's
President-elect Obama, for it was President-elect Obama who did go to
President Bush and did request that this Congress facilitate the
passage of the additional $350 billion.
Now, the chairman may not like the fact that President-elect Obama is
requesting it. Maybe, quite candidly, the chairman has the same
concerns that I do, that President-elect Obama failed to give us a
plan, which makes it hard for either one of us, quite candidly, to be
able to discuss either in committee or here on the Floor in a rational
and logical manner what it is exactly we will be spending the $350
billion on.
So I will join with the chairman in being concerned and outraged that
President-elect Obama has not given us a plan. But it is concerning
that the chairman points to President Bush, when he knows it is
President-elect Obama who instigated this in the first place.
But I will yield.
Mr. FRANK of Massachusetts. The gentleman has transformed my
correcting his error into distancing myself from President Obama. I
said when I got up that it was done by President Bush at the request of
President Obama.
Mr. GARRETT of New Jersey. I reclaim my time. Thank you. I understand
what he said before, but then you have to always point to the words
that came after that, and he was alluding to the fact that it actually
came to the floor from President Bush when, yes, it was President-elect
Obama who initiated it.
But for the fact that President-elect Obama initiated it, President
Bush, as far as I know, has never made a statement that he would have
unilaterally made that request. I have never seen anything in the
media, and I may be wrong, but I have never seen anything in the media
or otherwise saying that President Bush was about to come to this
Congress and ask for those additional funds.
It was President-elect Obama, for good or for bad, and I think for
the fact that we don't have a plan here, quite candidly, Mr. Chairman,
to discuss and debate today, more for the bad than the good that we are
coming here without such a plan.
I reserve the balance of my time.
Mr. FRANK of Massachusetts. I will yield myself 1 minute.
The gentleman from New Jersey has built that castle in the air
because I corrected his flat error. He said President-elect Obama asked
for it. He did not. I said that President Bush asked for it at the
request of President-elect Obama. How my correcting his error became
distancing myself from the new President is beyond me.
In fact, President Bush's administration did want the second $350
billion. The gentleman is wrong in saying they didn't. Secretary
Paulson was deterred from doing that, however, because we told him that
we were sufficiently disappointed in the way it had been administered
and that if he asked for it we would probably reject it, and that only
if he came to some agreement with the new President and the Congress
could that go forward. So those are the facts.
Yes, the outgoing administration wanted it. They withheld because
they were told they wouldn't get it unless they had cooperation, and
then the two administrations jointly did that. There is no distancing
when I make that point.
In fact, the central point here about the TARP is this: We believe
quite to the opposite that we are distancing ourselves from Mr. Obama.
We believe that because Bush used this badly is no reason to give Obama
not a chance to use it well.
I now yield 2 minutes to the gentleman from Kansas (Mr. Moore).
Mr. MOORE of Kansas. Mr. Chairman, I thank the chairman.
Mr. Chairman, I rise today in support of Chairman Frank's manager's
amendment and the underlying legislation. I want to thank Chairman
Frank and his excellent staff for working with me to address a concern
I had with the original draft bill.
[[Page H350]]
On Tuesday, I talked to our Kansas Governor, Kathleen Sebelius. We
were concerned about a provision in the bill that would have required
financial firms participating in TARP to divest their companies of
corporate business aircraft.
While it is clear that the auto executives were very insensitive to
the American taxpayers when they flew in their private jets last
November to request billions of dollars in Federal assistance, a
blanket prohibition against the corporate use of business aircraft
would have had the unintended consequence of hurting the general
aviation industry and its workers, which is important to Kansas.
With nearly 44,000 Kansans who work for aviation companies like
Cessna, Beechcraft, Learjet and Boeing, as well as their contracting
counterparts like Garmin and Honeywell, many Kansas families depend on
this industry. And the impact would have been felt not just in Kansas.
General aviation contributes more than $150 billion a year to the U.S.
economy and employs more than 1.2 million people.
I want to thank again Chairman Frank and his staff for responding to
our concerns and for striking this provision. This is good news for
Kansans and aviation workers across this country. These are difficult
times. I urge my colleagues to support the manager's amendment and this
bill to ensure these TARP funds are responsibly allocated with strong
oversight protections for the American taxpayer.
Mr. GARRETT of New Jersey. Mr. Chairman, I yield 5 minutes to the
gentleman from Texas (Mr. Hensarling), a leader on this issue and more
importantly a leader on the issue of reviving our economy in general
and in a free market manner which will not put the American taxpayer on
the hook.
Mr. HENSARLING. Mr. Chairman, I thank the gentleman for yielding.
Mr. Chairman, I again question why we are even here today. I observe
again that those who have risen to be the largest critics of the TARP
bill were the ones who wrote the TARP bill. So, number one, why weren't
the standards, the accountability, the provisions that some are seeking
today, why weren't they there originally? That is question number one.
Question number two is: Why are we having to have a vote that turns
off the spigot of an extra $350 billion of taxpayer money, as opposed
to turn it on?
So why are we even having to have this vote, Mr. Chairman, I think is
an interesting question that the American people want to know the
answer to.
Now, already if you look at the actions of the Federal Reserve, if
you look at the actions of Treasury, Mr. Chairman, we are already up to
somewhere in the neighborhood of $7 trillion to $8 trillion of
potential liability taxpayer exposure. I don't necessarily believe the
taxpayer will have to pay it all. I hope and pray that the taxpayer
will get some return on his investment.
{time} 1130
But to sit here and say that unless Congress somehow authorizes the
incoming President to spend an extra $350 billion that we could spend
ourselves, and to give him this authority, without any plan being
presented whatsoever, I mean, Mr. Chairman, that's just something I
don't understand. It's not something that the constituents that I
represent in the Fifth District of Texas understand.
Now, I do believe that the chairman is right on a couple of
instances, that, yes, we need to know how institutions who are
receiving TARP funds actually spend it. That's important. We need to
have some kind of measurement of success to know what's actually
happening here.
But I look at the provisions of the strings that he's attempting to
attach after the fact, when, if this was a horse leaving the barn, I
don't think we've seen much left but his tail. But when I look at the
strings that are being attached here, I mean, Number 1, we have
explicit language here that most of us have concluded is picking
winners and losers in our economy, express language dealing with the
auto companies.
Now, I don't want to see the auto companies fail. Nobody in America
does. But name me an industry in America that isn't struggling. Is
Congress so wise that they can decide which industries are deserving
the taxpayer bailout and which aren't?
It's one thing for the Federal Government to try to monitor the money
supply, ensure that the money supply is proper, that would hopefully
lift all industries, help all families, help all job creators and those
who have the jobs.
But it's another to start saying, well, here's the explicit plan for
the auto industry. And if it's the auto industry today, is it the
airlines industry tomorrow? Who is it next week?
Again, how can everybody who's struggling bail out everybody else
who's struggling?
And what has become of all of this money?
Again, it's not like this is the only $350 billion lying around. The
Federal Reserve already has a number of credit facilities that are set
up. We don't even know the full impact of the first $350 billion.
And so now we have a plan that, as I understand, and I believe I've
heard the chairman say that the Senate does not intend to vote on this,
which is another reason I question the use of the House's time on this
matter. But trying to have a provision that picks winners and losers in
our economy and, specifically, in our housing industry as well.
We know about the tragic circumstances in our housing industry. But
what's going to make it even more tragic, Mr. Chairman, is to take
money away from people who are current on their mortgages, or who rent,
or who own their homes outright, to give the money to people who aren't
current in their mortgage.
Now, there's a couple of reasons people aren't current in their
mortgages. Number 1, maybe it's through no fault of their own. Maybe
they were duped by a predatory lender. Maybe they had a serious
illness. Maybe they had a loss of job. I mean, these are serious
setbacks, and I would hope that we could help these people.
But, Mr. Chairman, there's a huge universe of people who engaged in
predatory borrowing, out-and-out mortgage fraud. There's a universe of
people who decided they would turn their homes into an ATM machine, and
now they expect their neighbor to bail them out. There's a whole group
who didn't really buy a home, they bought an investment and they
decided to live in it, and now they expect their neighbor to bail them
out.
When you're struggling to pay your mortgage, Mr. Chairman, you
shouldn't be compelled to have to pay your neighbors' as well.
For all these reasons, this amendment should be defeated.
Mr. FRANK of Massachusetts. Mr. Chairman, I first yield myself 1
minute to say that I appreciate the intellectual honesty of the
gentleman from Texas (Mr. Hensarling). He opposes one of the major
thrusts of this bill and one of the major criticisms many of us had of
the Bush administration, namely, the foreclosure relief. And the
gentleman opposed these efforts.
I must say that I am encouraged by the Bush appointee, Secretary of
HUD, Mr. Preston, the Bush appointee as head of the FDIC, Ms. Bair,
both of whom believe that we can do foreclosure protection with the
tools in this bill, and that it can be done effectively. But I
appreciate this is a genuine difference between us and I appreciate the
gentleman articulating it.
In 2007, this House passed a bill to restrict subprime lending of an
inappropriate sort aimed at both borrowers and lenders. It would have
made it impossible for people to borrow inappropriately, as well as to
lend. The gentleman, I believe, opposed that. Many others, the
gentleman from New Jersey did. There were some important philosophical
differences.
The Wall Street Journal, which today denounces us for trying to do
foreclosure relief, denounced us at the time. They said when we passed
the bill to restrict subprime lending, it was an undue interference in
the market, and we're going to keep people from owning homes.
The Acting CHAIR. The time of the gentleman has expired.
Mr. FRANK of Massachusetts. I yield myself an additional 30 seconds.
So just to be clear, whether or not there should be Federal programs
as advocated by FDIC Chair Bair, Secretary of HUD Preston and many
others, whether or not there should be Federal programs to reduce
foreclosure, is a very defining difference between most of us on this
side and most on the other side; although there
[[Page H351]]
are many on the Republican side who do agree with us that we should try
to abate foreclosures, not just as a matter of compassion, but as
central to solving our economic problem.
I now yield 2 minutes to the gentlewoman from Texas (Ms. Jackson-
Lee).
(Ms. JACKSON-LEE of Texas asked and was given permission to revise
and extend her remarks.)
Ms. JACKSON-LEE of Texas. Let me thank the chairman very much. And I
might just simply say that I remember the haggling previously in the
last year about this bill. And one of the issues was the veto threat of
the President in not allowing us to add language earlier. We fought for
it.
Let me thank the chairman very much for what we've all fought for
over the years, over the last couple of months, and that is the amount
of, if you will, mortgage set aside money. I want to announce that over
and over again, that there is now money included in here to directly
work with my constituent who I sat down at her kitchen table. She gets
$18,000 a year, but she's hardworking and she had a home that she could
afford, except for the adjustable rate. So I want to thank for that.
And it is something that I want more. We all want more, but we're
starting out in that direction to be able to focus on mortgage
workouts.
Mr. Chairman, I'd like to engage in a colloquy at this time. Quickly,
the Treasury Department has yet to issue the necessary guidelines for
about 3,000 additional private banks. Most of them are set up as
partnerships with no more than 100 shareholders. They are not able to
issue preferred shares to the government in exchange for capital
injections at other banks. However, they are very vital to the inner
city. And I ask, in our work together, whether or not if you can
explain the language.
Mr. FRANK of Massachusetts. If the gentlewoman would yield.
Ms. JACKSON-LEE of Texas. I'd be happy to yield.
Mr. FRANK of Massachusetts. She's absolutely right. I appreciate her
calling this to our attention. We have amended the bill to take into
account these private banks, many of which serve lower-income
communities and are themselves people of experience in this area.
As I said yesterday when the question came up about mutuals, the form
of ownership should not be determinative here. Whether or not they are
performing a valid function in the economy and whether or not they can
use these funds responsibly is all that should cover. So we did amend
the bill at the gentlewoman's request in that manner.
Ms. JACKSON-LEE of Texas. We thank you very much. And the language
does move this along, and I want to thank you.
Quickly, let me also thank you for regulating the automobile
industry, which you promised to do, which you also worked specifically
to provide more credit to the automobile industry. But in that light we
talked about----
The Acting CHAIR. The time of the gentlewoman has expired.
Mr. FRANK of Massachusetts. I yield the gentlewoman 30 seconds.
Ms. JACKSON-LEE of Texas. We talked about minority participation. You
have now some language that says, not only can they benefit as small
businesses from loans, but they can service or participate in that
process of doing business.
Mr. FRANK of Massachusetts. If the gentlewoman would yield.
Ms. JACKSON-LEE of Texas. I'd be happy to yield.
Mr. FRANK of Massachusetts. Yes. In fact, it will make the
administration better if those administering it have knowledge of and
represent the whole range of people to whom this is aimed. And I thank
the gentlewoman.
Ms. JACKSON-LEE of Texas. Well, let me thank you specifically for the
Office of Minority and Women Inclusion. It is a great edition. And I
would say this is a tough business. People are hurting. It's time to
move forward on a newly regulated TARP, the American people's taxpayer
dollars will be protected.
Mr Chair, I rise today in strong support of H.R. 384, the Troubled
Assets Relief Program, TARP, Reform and Accountability Act of 2009.
This bill will amend the TARP provisions of the Emergency Economic
Stabilization Act of 2008, EESA, to strengthen accountability, close
loopholes, increase transparency, and most importantly, require the
Treasury Department to take significant steps on foreclosure
mitigation.
Mr. Chair, I was particularly pleased to work with Chairman Frank and
his staff on significant portions of the manager's amendment to this
legislation which ensures that small and minority businesses along with
local, community, and private banks gain fair and equitable access to
the TARP funds.
It has been 3 months since the Treasury started disbursing TARP
funds. Just in time perhaps for a lot of big banks; however, smaller
banks have been locked out so far. A lot of small banks certainly are
in need of relief as the real estate crisis continues to unfold and
hundreds have already applied.
According to recent reports, the Treasury Department has yet to issue
``the necessary guidelines for about 3,000 additional private banks.
Most of them are set up as partnerships, with no more than 100
shareholders. They are not able to issue preferred shares to the
government in exchange for capital injections, as other banks can.''
While Treasury officials state they are ``working on a solution,'' for
these private banks time is of the essence.
The Treasury Department has handed out more than $155 billion to 77
banks. Of that sum, $115 billion has gone to the eight largest banks.
Community banks hold 11 percent of the industry's total assets and play
a vital role in small business and agriculture lending. Community banks
provide 29 percent of small commercial and industrial loans, 40 percent
of small commercial real estate loans, and 77 percent of small
agricultural production loans.
This manager's amendment requires that the Treasury Department act
promptly to permit smaller community financial institutions that have
been shut out so far to participate on the same terms as the large
financial institutions that have already received funds.
Small businesses are the backbone of our Nation, and unfortunately,
they have not been afforded the opportunity that large financial
institutions have received to TARP funds and loans. Small businesses
represent more than the American dream--they represent the American
economy. Small businesses account for 95 percent of all employers,
create half of our gross domestic product, and provide three out of
four new jobs in this country. Small business growth means economic
growth for the Nation. We cannot stabilize and revitalize our economy
without ensuring the inclusion and participation of the small business
segment of our economy. With the ever worsening economic crisis, we
must ensure in this legislation that small and minority businesses and
community banks are afforded an opportunity to benefit from this
important legislation. I am very pleased that the manager's amendment
will effect this change.
In Section 107, the manager's amendment creates an Office of Minority
and Women Inclusion, which will be responsible for developing and
implementing standards and procedures to ensure the inclusion and
utilization of minority and women-owned businesses. These businesses
will include financial institutions, investment banking firms, mortgage
banking firms, broker-dealers, accountants, and consultants.
Furthermore, the inclusion of these businesses should be at all
levels, including procurement, insurance, and all types of contracts
such as the issuance or guarantee of debt, equity, or mortgage-related
securities. This office will also be responsible for diversity in the
management, employment, and business activities of the TARP, including
the management of mortgage and securities portfolios, making of equity
investments, the sale and servicing of mortgage loans, and the
implementation of its affordable housing programs and initiatives.
Section 107 also calls for the Secretary of the Treasury to report to
Congress in 180 days detailed information describing the actions taken
by the Office of Minority and Women Inclusion, which will include a
statement of the total amounts provided under TARP to small, minority,
and women-owned businesses. The manager's amendment in Section 404 also
has clarifying language ensuring that the Secretary has authority to
support the availability of small business loans and loans to minority
and disadvantaged businesses.
This will be critical to ensuring that small and minority businesses
have access to loans, financing, and purchase of asset-backed
securities directly through the Treasury Department or the Federal
Reserve.
H.R. 384 reforms TARP by increasing oversight, reporting, monitoring
and accountability. It requires any existing or future institution that
receives funding under TARP to provide no less than quarterly public
reporting on its use of TARP funding. Any insured depository
institution that receives funding under TARP is required to report
quarterly on the amount of any increased lending, or reduction in
decrease of lending and related activity attributable to such financial
assistance.
In connection with any new receipt of TARP funds, Treasury is also
required to reach an
[[Page H352]]
agreement with the institution, and its primary Federal regulator on
how the funds are to be used and benchmarks the institution is required
to meet so as to advance the purposes of the act to strengthen the
soundness of the financial system and the availability of credit to the
economy. In addition, a recipient institution's primary Federal
regulator must specifically examine use of funds and compliance with
any program requirements, including executive compensation and any
specific agreement terms.
Mr. Chair, I am pleased that this legislation has strong requirements
regarding executive compensation. For any new receipt of TARP funds,
except those by small financial institutions, this legislation applies
the most stringent non-tax executive compensation restrictions from
EESA across the board including:
1. Requiring Treasury to prohibit incentives that encourage excessive
risks,
2. Providing for claw-back of compensation received based on
materially inaccurate statements; and
3. Prohibits all golden parachute payment for the duration of the
investment.
Included in this legislation is a requirement of government board
representation by authorizing Treasury to have an observer at board or
board committee meetings of recipient institutions. This legislation
changes the structure and authority of TARP board--the Financial
Stability Oversight Board is expanded to include the Chairman of the
FDIC and two additional members who are not currently Federal
employees, who shall be appointed by President and subject to Senate
confirmation. The Board will have the authority to overturn policy
decisions of the Treasury Secretary by a two-thirds vote.
Mr. Chair, the act provides that the second $350 billion is
conditioned on the use of up to $100 billion, but no less than $40
billion, for foreclosure mitigation, with plan required by March 15,
2009. By that date, the Secretary shall develop, subject to TARP Board
approval, a comprehensive plan to prevent and mitigate foreclosures on
residential mortgages. The Secretary shall begin committing TARP funds
to implement the plan no later than April 1, 2009. The Secretary must
certify to Congress by May 15, 2009, if he has not committed more than
required minimum $40 billion.
The foreclosure mitigation plans must apply only to owner-occupied
residences and shall leverage private capital to the maximum extent
possible consistent with maximizing prevention of foreclosures.
Treasury must use some combination of the following program
alternatives:
1. Guarantee program for qualifying loan modifications under a
systematic plan, which may be delegated to the FDIC or other
contractor;
2. Bringing costs of Hope for Homeowner loans down, beyond mandatory
changes in Title V below, either through coverage of fees, purchasing
H4H mortgages to ensure affordable rates, or both;
3. Program for loans to pay down second lien mortgages that are
impeding a loan modification subject to any writedown by existing
lender Treasury may require;
4. Servicer incentives/assistance--payments to servicers in
connection with implementation of qualifying loan modifications; and
5. Purchase of whole loans for the purpose of modifying or
refinancing the loans with authorization to delegate to FDIC.
In consultation with the FDIC and HUD and with the approval of the
Board, Treasury may determine that modifications to an initial plan are
necessary to achieve the purposes of this act or that modifications to
component programs of the plan are necessary to maximize prevention of
foreclosure and minimize costs to the taxpayers.
A safe harbor from liability is provided to servicers who engage in
loan modifications, regardless of any provisions in a servicing
agreement, so long as the servicer acts in a manner consistent with the
duty established in Homeowner Emergency Relief Act, maximize the net
present value, NPV, of pooled mortgages to all investors as a whole;
engage in loan modifications for mortgages that are in default or for
which default is reasonably foreseeable; the property is owner-
occupied; the anticipated recovery on the mod would exceed, on an NPV
basis, the anticipated recovery through foreclosure.
This bill requires persons who bring suit unsuccessfully against
servicers for engaging in loan modifications under the act to pay the
servicers' court costs and legal fees. It also requires servicers who
modify loans under the safe harbor to regularly report to the Treasury
on the extent, scope, and results of the servicer's modification
activities.
In addition to the above requirements, an oversight panel is required
to report to Congress by July 1 on the actions taken by Treasury on
foreclosure mitigation and the impact and effectiveness of the actions
in minimizing foreclosures and minimizing costs to the taxpayers.
H.R. 384 clarifies and confirms Treasury authorization to provide
assistance to automobile manufacturers under the TARP. With respect to
the assistance already provided to the domestic automobile industry,
includes conditions of the House auto bill, including long-term
restructuring requirements.
There is further clarification on:
Treasury's authority to provide support to the financing arms of
automakers for financing activities is clarified to ensure that they
can continue to provide needed credit, including through dealer and
other financing of consumer and business auto and other vehicle loans
and dealer floor loans;
Treasury's authority to establish facilities to support the
availability of consumer loans, such as student loans, and auto and
other vehicle loans. Such support may include the purchase of asset-
backed securities, directly or through the Federal Reserve;
Treasury's authority to provide support for commercial real estate
loans and mortgage-backed securities; and
Treasury's authority to provide support to issuers of municipal
securities, including through the direct purchase of municipal
securities or the provision of credit enhancements in connection with
any Federal Reserve facility to finance the purchase of municipal
securities.
In addition, more reforms are enunciated for homeowners in title V.
The home buyer stimulus provisions requires Treasury to develop a
program, outside of the TARP, to stimulate demand for home purchases
and clear inventory of properties, including through ensuring the
availability of affordable mortgages rates for qualified home buyers.
In developing such a program Treasury may take into consideration
impact on areas with highest inventories of foreclosed properties. The
programs will be executed through the purchase of mortgages and MBS
using funding under HERA. Treasury will provide mechanisms to ensure
availability of such reduced rate loans through financial institutions
that act as either originators or as portfolio lenders.
Under this provision, Treasury has to make affordable rates available
under this program available in connection with Hope for Homeowner
refinancing program.
This legislation will give a permanent increase in FDIC and NCUA
deposit insurance limits, it makes permanent the increase in deposit
insurance coverage for banks and credit unions to $250,000, which was
enacted temporarily as part of the Emergency Economic Stabilization Act
and is scheduled to sunset on December 31, 2009, and includes an
inflation adjustment provision for future coverage.
Finally, I applaud Chairman Frank and the Committee on Financial
Services for their hard work on this important piece of legislation. In
this economic climate it is critical for us to remember that while we
need to assist our financial institutions, we cannot do this without
implementing reforms to protect Americans' hard-earned money.
I strongly urge my colleagues to join me in support of this important
legislation.
Mr. GARRETT of New Jersey. I first yield myself 30 seconds to respond
to the chairman's question. Yes, there is a specific philosophical
difference with regard to keeping people in their houses. As we know,
both sides of the aisle want to do the best that the Federal Government
can do in this area. And the administration has already set up a
program, the HOPE program, and taken other actions to try to facilitate
those people who are in difficult situations to remain in their houses.
But I believe it was Ms. Waters on your side of the aisle that raised
the same point similar to what I raised. What do we say to the person
who has been on time paying their bills, which is over 90 percent of
the American public homeowners, who has been paying their bill month
after month after month on time and saying to them, well, you know
what? We're going to use your tax dollars to subsidize the people
across the street with a program to help them keep when they went over
the amount they should be spending on their homes. And that is the
philosophical difference that we have.
I yield now 2 minutes to the gentleman from Indiana (Mr. Burton).
Mr. BURTON of Indiana. Let me just start off by saying I'm opposed to
all these bailouts.
But after having said, let me say that if we're going to do it we
really need a comprehensive plan that's going to deal with the problems
facing this country.
I had home builders come into my office last week, and they told me
that their businesses are being re-appraised, and they're going to have
to pay the difference between what the appraisal was initially and what
it is now, and they're driving a lot of these home builders out of
business.
I had some people who are commercial developers come in to see me
last
[[Page H353]]
week, and they told me that their commercial assets are being re-
appraised, maybe 70 percent of what they were before, and they have to
pay the difference between what they were getting and the 70 percent,
and they're being driven out of business. So there's a huge cascading
effect with all these problems that we're facing right now. And we're
not addressing them in this bill or any of the other bills that I've
seen.
You've got people who are losing their homes. You've got home
builders that are going out of business. You've got commercial
developers that are going out of business because of these re-
appraisals, and there's nothing in the plans that I've seen that
addresses these problems.
Mr. Frank and I are good friends. But just throwing this money at
these problems without any plan is actually crazy. And yet we did it
with the first $350 billion tranche, and we're going to do it again,
and then we're going to come back with a $1.2 trillion request in just
another 2 or 3 weeks. I mean, we can't buy our way out of these
problems. We have to have a sound business plan to deal with these
problems. And if we don't do it, we're going to see a huge economic
problem that's even worse than what we face today.
So I'd like to say to Mr. Frank and my colleagues, before we start
giving all this money away, why don't we really sit down with the
people that are supposed to be administering this money and come up
with a sound plan that affects the entire economy. I mean, if you're
going to spend the money, we might as well do it the right way.
Mr. FRANK of Massachusetts. Mr. Chairman, first I'll yield myself 30
seconds to answer the question. What do we tell the person making
mortgage payments why we are trying to help reduce foreclosures? And
the major reason is that it is the improvident granting of these loans
and the failure of many of these loans to pay off that is the single
biggest cause of the financial crisis we're in. And a wide range of
economists agree that until we reduce the rate of foreclosures which
are embedded in so many securities that were, without regulation,
scattered around the economic landscape, we will not be able to undo
the economic problem we're in. So foreclosure diminution is part of our
economic recovery plan.
It also, of course, hurts property values in general.
I now yield 1 minute to a very active member of our committee, the
gentleman from Colorado (Mr. Perlmutter).
Mr. PERLMUTTER. Mr. Chairman, I rise in support of the manager's
amendment and the bill. We're in a position where $350 billion, without
any conditions, is likely to be passed, or it's been requested and
likely will go out the door.
These conditions are important, and the conditions that are added
through the manager's amendment are particularly important. One of the
things we talked about with the original TARP bill was that money
would, 1, buy mortgage portfolios, 2, recapitalize banks and 3, pass
through various agencies to small businesses through the Federal home
loan banks and through the farm credit administration.
This manager's amendment assures that money passes directly to people
on Main Street, including the home builders that Mr. Burton was just
talking about, commercial realtors, commercial real estate, farmers,
municipal bond dealers, so that credit all across the board is
available to people and gets this economy back on track and loosens up
credit across the United States.
And I support the manager's amendment and ask for an ``aye'' vote.
Mr. GARRETT of New Jersey. Mr. Chairman, I yield 3 minutes to Mr.
Schock from Illinois.
Mr. SCHOCK. Chairman Frank, Ranking Member Bachus and Congressman
Garrett, first let me thank you for the opportunity to come to the
floor and speak today.
Chairman Frank, I congratulate you on bringing this piece of
legislation forward, and I admire the meticulous and bipartisan nature
in which you have crafted it.
I would like also to thank you, the both of you, for the inclusion of
my noncontroversial amendment into the manager's amendment. I believe
this amendment represents a small but important step which will serve
the good of the American people.
My amendment is very simple. It establishes a user-friendly Web site
where the American people can quickly and accurately see where their
money is going.
During debate yesterday, we heard the need for more oversight, more
transparency, and more control over the flow of TARP funds.
{time} 1145
I am glad that we here in Congress will be provided more information
about TARP funds. However, what about the American people?
This is their money, and I believe they need to be able to track it.
I hope that an online database will provide a helpful tool in this
effort. In essence, this amendment seeks to create a Google for TARP.
This Web site will clearly display who is using the money, for what
purposes and how their dollars will ultimately cycle back to their
pockets. I intend this Web site to be easily searchable and to contain
information on both specific payments and on the aggregate amounts
received by each receiving entity. This amendment is about accurate
accounting, openness, fair government, transparency, and hopefully, one
day, balancing our budget.
You know, when my constituents leave the grocery store, they know
three things--what they've spent, what they got for their money and how
their purchases are going to help their families. Well, the American
people deserve to know the same thing when they, for the very first
time, are pouring billions of the same hard-earned dollars, which they
used to purchase groceries, into the financial and housing markets.
Americans should be able to identify what is being spent in their name.
Currently, the Treasury Department provides limited balance sheets,
listing complex purchases on their Web site. The target audience of
this Web site is for those applying for TARP funds, in other words,
financial experts. It is not for those who are looking to see how their
money is spent.
Well, I'm sure my constituents are very similar to yours. They're not
high-powered New York City investment bankers. While they have not been
a part of this problem, they're being asked to foot the bill for it. In
doing so, it is their right to know where their money is going, for
what programs it is being used and how it will benefit them in the long
run.
While I support the bill we are considering today, I am concerned
that these changes, while needed, will further confuse where this money
is going. Funds will begin to cross over multiple government agencies
to the point where anyone wanting to track the flow of money would have
to visit multiple Web sites with his mouse in one hand and his
calculator in the other. A person should not have to be a forensic
accountant to decipher where his tax dollars are being allocated.
The Acting CHAIR. The time of the gentleman has expired.
Mr. FRANK of Massachusetts. I yield the gentleman an additional 30
seconds.
Mr. SCHOCK. Thank you, Mr. Frank.
My hope is that, through this amendment, we can establish something
similar to or what can become a part of what our President-elect has
established under the Federal Funding Accountability and Transparency
Act of 2006--the USAspending.gov Web site, a Web site explaining to the
American people the different Federal agencies and how their hard-
earned money is being spent to better their lives.
As I said, this is a commonsense amendment that seeks to improve the
people's access to their government.
Mr. FRANK of Massachusetts. Would the gentleman yield to me the
remaining few seconds?
Mr. SCHOCK. Yes, sir.
Mr. FRANK of Massachusetts. I just want to say the gentleman said his
amendment was noncontroversial, but noncontroversial doesn't mean
unimportant. It is a very thoughtful amendment. It will greatly advance
things, and I appreciate his offering it.
The Acting CHAIR. The gentleman's time has expired.
Mr. FRANK of Massachusetts. I yield 2 minutes to one of the Members
who has been most active in trying to deal
[[Page H354]]
with this foreclosure problem that other Members think we should
ignore. He is the gentleman from Maryland (Mr. Cummings).
Mr. CUMMINGS. Mr. Chairman, I rise today in support of the manager's
amendment offered today by Chairman Frank to H.R. 384, the TARP Reform
and Accountability Act of 2009. I will also take this opportunity to
commend his extraordinary leadership on this issue and to thank him and
the Rules Committee for including language that I have proposed within
the manager's amendment.
The language I offer requires the Comptroller of the Currency and the
Director of the Office of Thrift Supervision to issue mortgage
modification data collection and reporting requirements for the banks
they regulate and to report this information back to Congress. This
amendment is necessary for one clear reason:
In a December 8, 2008 report, the OCC announced that, within 3 months
of an initial mortgage modification, nearly 36 percent of borrowers
redefaulted by being more than 30 days past due. After 6 months, the
rate was nearly 53 percent, and after 8 months, it was 58 percent.
Unfortunately, no one really knows the reasons behind these redefault
rates. This language will help us gather the information we need to
understand what is occurring and to understand, hopefully, why it is
occurring.
Mr. Chairman, a RealtyTrac reported this morning that the foreclosure
rate jumped to 81 percent in 2008 with one in every 54 households
experiencing at least one foreclosure. This equates to nearly 2.3
million properties.
Foreclosure rates are projected to rise in the coming months, and it
is, therefore, imperative to us to understand the nature of the
modifications being made by lenders and whether they address the real
needs of borrowers by creating terms borrowers can realistically meet.
It is our duty to protect homeowners and to ensure transparency,
accountability and strict standards. H.R. 384 accomplishes these
objectives.
Again, I want to thank Mr. Frank for his efforts, and I want to urge
my colleagues to support this amendment and the underlying bill.
Mr. GARRETT of New Jersey. Mr. Chairman, at this time, I yield
another 2 minutes to the gentleman from Texas (Mr. Hensarling).
Mr. HENSARLING. I was listening carefully to the distinguished
chairman of the Financial Services Committee when he introduced the
previous speaker. He said the gentleman cared passionately about the
foreclosure mitigation, and apparently, other Members don't. I'm not
sure who the chairman was alluding to. We certainly care about
foreclosure mitigation on this side of the aisle.
Mr. Chairman, there is no better foreclosure mitigation plan than
keeping your job, number 1, having expanded opportunities for a better
job in the future, and number 3, having a growing paycheck. That's why
Republicans on this side of the aisle have supported a tax relief plan
to make sure that people keep their jobs and to help small businesses.
It's why people on this side of the aisle--why Republicans, Mr.
Chairman--have supported a plan that would reduce the tax on future job
creation--the capital gains tax, the tax on investment. It's why we
have supported tax reductions for middle-income families so they can
pay these mortgages.
I see, unfortunately, that the chairman has left the floor, but I
would also observe that over 2 million mortgages have been refinanced
between the borrowers and lenders.
Listen, a great tragedy has occurred in our housing market. Now the
question is: With all of these losses, who is going to realize it? Is
it going to be the borrowers and the lenders or is it going to be the
taxpayers?
So, if some believe there are other Members who don't care about
foreclosure mitigation, I would say, Mr. Chairman, it appears that some
Members don't care about the debt that they are placing on future
generations, constraining their homeownership opportunities. They don't
care about the fact that we are now looking, under this Congress, at
the single largest deficit in America's history, that we are seeing red
ink as far as the eye can see and that we are possibly planting the
seeds for an even worse recession 5, 6, 7, 8 years from now because bad
public policy decisions, Mr. Chairman, after 9/11 and after the dot-com
bubble have led us to where we are today.
Mr. DRIEHAUS. Mr. Chairman, I yield myself 1 minute.
Thank you to the gentleman from Massachusetts for his leadership on
this amendment and for his leadership on this issue. I stand in support
of the manager's amendment.
Many who support it--the Emergency Economic Stabilization Act that
first authorized the money for TARP--despite the fact that they were
angered by the circumstances that caused its necessity, believed it was
essential for the Nation's economy.
My home State of Ohio is amongst the Nation's leaders in its
foreclosure rate, and I am keenly aware of the need for intervention to
mitigate the increasing number of foreclosures. This measure recognizes
that and provides relief for those who need it most, not just for
America's homeowners, not just for America's financial institutions but
for entire communities that are suffering and that are failing under
the weight of the foreclosure crisis.
I appreciate the chairman's fundamental work on this issue. Again, I
would encourage my colleagues to support the manager's amendment.
Mr. GARRETT of New Jersey. Mr. Chairman, at this time, I have no
further speakers, and I would reserve my time until the gentleman from
Massachusetts is ready to close.
Mr. FRANK of Massachusetts. I yield 2 minutes to one of the most
active advocates of trying to have effective foreclosure relief. She is
the gentlewoman from Maryland (Ms. Edwards).
Ms. EDWARDS of Maryland. Mr. Chairman, I rise today in support of the
underlying bill and of the amendment introduced by my good friend from
Massachusetts.
He has been a tireless leader, the chairman has, in trying to ensure
that this administration does right by the taxpayers and that it
particularly does right by homeowners who are facing foreclosure.
Like many of my colleagues, I supported the final TARP. Yet, despite
the debate in this Congress and despite the intense discussions with
the administration, they failed taxpayers miserably in making sure that
homeowners are protected, that they stay in their homes and that we
restore stability to our housing and mortgage markets.
This amendment adds and strengthens many critically important
provisions. I particularly support the establishment of an Office of
Minority and Women Inclusion.
As my colleague from Maryland noted, foreclosures continue to take
their toll on families, communities and States across this country.
Yesterday, of course, RealtyTrac announced that the foreclosure rate
was up 81 percent in 2008. In fact, it's likely that, in my home State
of Maryland, 1 in 26 homeowners will experience foreclosure this year.
Many of those homeowners, some of those homeowners, live in my own
neighborhood.
I represent two counties leading our State in foreclosure numbers. If
left unaddressed, the foreclosures will continue to increase and will
touch even more lives. I am frustrated that this administration has
failed and that foreclosures have skyrocketed.
Yet it's important now for us to get it right for the American people
and for the taxpayer. So I support the underlying bill and the
amendment. I applaud the chairman for his leadership to make certain
that American taxpayers are protected, that we ensure that people stay
in their homes, that they are protected from foreclosure, that we
stabilize our housing market, and that we provide accountability for
taxpayers and for the administration.
Mr. GARRETT of New Jersey. I continue to reserve the balance of my
time.
Mr. FRANK of Massachusetts. I yield 1 minute to the gentleman from
Minnesota (Mr. Ellison) who has been a fierce advocate here,
particularly of the rights of tenants, which are often overlooked in
this process.
Mr. ELLISON. Let me thank Chairman Frank for bringing this critical
legislation to the floor.
When Congress passed the emergency financial services rescue package
last fall, we included specific provisions to help distressed
homeowners. Unfortunately, the Bush administration decided to help out
Wall Street with
[[Page H355]]
these funds while ignoring the needs of Main Street.
The fact is that this piece of legislation, carefully crafted and now
working with an amenable and a cooperative administration, is in a much
better position to meet the needs set forth in the original
legislation, which is to help homeowners. The bill requires at least
$40 billion, but no more than $100 billion, be used to help distressed
homeowners.
Finally, I am excited to report that there is a measure that I
authored with other Members which provides reasonable protections for
bona fide renters, which is something I'm very happy about. I am
pleased to be able to support this legislation today.
Again, Mr. Chairman, let me thank our very able chairman on this
piece of legislation so we can get our country back and moving again.
Mr. GARRETT of New Jersey. I continue to reserve the balance of my
time.
Mr. FRANK of Massachusetts. The gentleman should proceed because I
will be closing for us, and I am the last speaker.
The Acting CHAIR. The gentleman from New Jersey is recognized for 2
minutes.
Mr. GARRETT of New Jersey. Mr. Chairman, the gentleman from Colorado
said that this amendment will make sure of ``such and such,'' and he
listed off a half a dozen things that the bill, or the amendment, will
do.
The reality is that the chairman will tell him this amendment will
make sure of absolutely nothing. Why? Because this amendment will never
become law. That's not me saying that. That's what the chairman has
said repeatedly as well. It is not going to move in the House and the
Senate. It is not going to be eventually signed by the President.
Soon, we'll be voting on legislation that will, in essence, allow the
next administration to spend $350 billion, and the American taxpayer
will be asking us: What did we authorize that $350 billion for? For
there was no plan, and there is no plan as we speak here today as to
what the next administration will be spending that $350 billion for.
Congress should not authorize, Congress should not pass any other
legislation until we have the specifics of a plan. We should not do so
until we have a plan that will not pick winners and losers, until we
have a plan that will protect the American taxpayer, until we have a
plan in place and the language before us that will not bail out the
banks that made terrible decisions. We should not be moving legislation
that will appropriate $350 billion until we have a plan in writing
specifically that will not bail out borrowers who knowingly took
inappropriate loans.
Finally, we should not spend an additional $350 billion as we pick
winners and losers and do nothing, absolutely nothing, for the 90-plus
percent of American homeowners who have done absolutely everything
right and who have paid their loans and mortgages on time and who are
now asking: Why are they bailing out the banks and other imprudent
lenders?
I encourage all of my colleagues at this point in time to vote ``no''
on this amendment that will do absolutely nothing to ensure these
protections to the American taxpayers. I encourage all of my colleagues
as well to vote such that we will not appropriate an additional $350
billion of taxpayer dollars.
With that, I yield back the balance of my time.
{time} 1200
Mr. FRANK of Massachusetts. Mr. Chairman, it becomes clear that for
many in the minority this is an opportunity to punish Barack Obama for
the mistakes made by George Bush. The gentleman says we should have a
plan. In fact, what they are objecting to is the plan.
Here is where we differ: They have said, the gentleman who just
spoke, the ranking member of the full committee, ``Let's ask the
President to tell us what he plans to do.'' We want to do it the
opposite way. We want to pass this bill to tell the President what we
think should be done.
Now, it doesn't get specific as to institutions. It shouldn't. We
don't pick institutions here. We empower them and direct them, in some
cases, to deal with the whole economy and with classes of institutions.
There is no selection here by Congress of this or that company or even
line of business.
Secondly, the gentleman closed by saying why should the majority
respond to the foreclosure issue. And the answer is that the
foreclosure issue hurts everybody in this country. It reduces property
values too radically. It reduces the capacity of institutions that have
these assets that are held. It hurts pension funds. It hurts a whole
range of people. It hurts people's 401(k)s. The whole society has
suffered from this improvidence.
And I would note again, in 2007, the majority in the House, when we
became the majority, voted to ban these loans from being made whether
the fault was on the part of the borrower or the lender. The gentleman
from New Jersey and others condemned that, said we were interfering
unduly with the market. He said the market would take care of it. Well,
the market hasn't taken care of it. The market has plummeted.
This bill does what Members say they want, and I guess they won't
take ``yes'' for an answer. It says this is what the House believes
should be in the plan. And no, it does not look like it's going to pass
the Senate now, although Members on the other side rarely think that's
a reason for us not to act. But if we pass this and the President was
to disappoint us--and I don't expect him to; I have a great deal of
confidence in him--and not carry this out, the bill will be alive in
the Senate and will be available as an instrument to do it.
Beyond that, here's the difference. We passed a law, and George Bush
ignored the law, as he often does. There will be a great contrast
between a President who ignored the law and a President who agrees with
us to abide with what the House asked him to do.
The Acting CHAIR. The question is on the amendment offered by the
gentleman from Massachusetts (Mr. Frank).
The question was taken; and the Acting Chair announced that the ayes
appeared to have it.
Mr. FRANK of Massachusetts. Mr. Chairman, I demand a recorded vote.
The Acting CHAIR. Pursuant to clause 6 of rule XVIII, further
proceedings on the amendment offered by the gentleman from
Massachusetts will be postponed.
Amendment No. 2 Offered by Ms. Matsui
The Acting CHAIR. It is now in order to consider amendment No. 2
printed in House Report 111-3.
Ms. MATSUI. Mr. Chairman, I offer an amendment.
The Acting CHAIR. The Clerk will designate the amendment.
The text of the amendment is as follows:
Amendment No. 2 offered by Ms. Matsui:
Page 32, after line 19 insert the following new section
(and redesignate the subsequent section and conform the table
of contents accordingly):
SEC. 206. FORECLOSURE MORATORIUM RECOMMENDATION.
(a) Foreclosure Deferment.--It is the sense of the Congress
that any institution which becomes an assisted institution on
or after the date of the enactment of this Act should not
initiate, or allow to continue, a foreclosure proceeding or a
foreclosure sale on any with respect to any principal
homeowner mortgage, until the earliest of the following:
(1) The date by which the comprehensive plan to prevent and
mitigate foreclosures has been developed by the Secretary and
the Federal Deposit Insurance Corporation and approved by the
Financial Stability Oversight Board under section 201 and
become fully operational.
(2) The date by which the systematic foreclosure prevention
and mortgage modification plan has been established by the
Secretary in accordance with section 204 and become fully
operational.
(3) The end of the 9-month period beginning on the date of
the enactment of this Act.
(b) FHA-Regulated Loan Modification Agreements.--If an
assisted institution to which subsection (a) applies reaches
a loan modification agreement with a homeowner under the
auspices of the Federal Housing Administration before any
plan referred to in paragraph (1) or (2) of such subsection
takes effect, subsection (a) shall cease to apply to such
institution as of the effective date of the loan modification
agreement.
(c) Duty of Consumer to Maintain Property.--Any homeowner
for whose benefit any foreclosure proceeding or sale is
barred under subsection (a) from being instituted, continued
, or consummated with respect to any homeowner mortgage may
not, with respect to any property securing such mortgage,
destroy, damage, or impair such property, allow the property
to deteriorate, or commit waste on the property.
[[Page H356]]
(d) Duty of Consumer to Respond to Reasonable Inquiries.--
Any homeowner for whose benefit any foreclosure proceeding or
sale is barred under subsection (a) from being instituted,
continued, or consummated with respect to any homeowner
mortgage shall respond to reasonable inquiries from a
creditor or servicer during the period during which such
foreclosure proceeding or sale is barred.
The Acting CHAIR. Pursuant to House Resolution 62, the gentlewoman
from California (Ms. Matsui) and a Member opposed each will control 5
minutes.
The Chair recognizes the gentlewoman from California.
Ms. MATSUI. Mr. Chairman, I rise today to offer an amendment, along
with Representative Kathy Castor, to help homeowners across our
country. Our amendment expresses the sense of the Congress that
financial institutions who receive future TARP funds should not
foreclose on any principal homeowner until the new loan modification
program in the bill is implemented and deemed fully operational.
Mr. Chairman, the foreclosure crisis is the root cause of our current
economic crisis. Sadly, there is no end in sight.
Right now, more than 8 million homeowners are expected to face
foreclosure over the next 4 years. That is one in six mortgages in the
United States. The rising unemployment will cause even more Americans
to face foreclosure.
California, and in particular my home district of Sacramento, has
been greatly impacted by the foreclosure crisis. I've hosted
foreclosure workshops. I've seen the hardships and looks of desperation
on so many faces not knowing if they will lose their home.
At one workshop, I was approached by a woman that had a loan through
one of the financial institutions that had taken TARP funds. When we
met, she had been talking to the bank's representatives for a few
months to no avail. She was one step from losing her home. It took her
dozens of phone calls and letters over many months for her and the bank
to settle on a new loan. I worry that without a true moratorium on
foreclosures, people like her will not be as lucky.
Similar situations are occurring throughout the country.
Congress must use all of our available resources to keep Americans in
their homes. The bill we're considering today calls for the strongest
foreclosure prevention program to date. It requires the Treasury and
the FDIC to develop a comprehensive systemic loan modification program
by April 1. However, that is more than 3 months away, and the plan is
estimated to take an additional month or two to become operational. In
the meantime, thousands of homeowners could be foreclosed upon.
Our goal is to help Main Street. It would be devastating if
homeowners were foreclosed on before they had an opportunity to qualify
for the new loan modification program under this bill.
That is why I have offered my amendment with Congresswoman Castor
that calls on the mortgage industry to implement a temporary timeout on
foreclosures.
Our constituents and businesses need breathing room to find solutions
to help Americans stay in their home. I've been calling for a
moratorium on foreclosures over the last 8 months. Last May, I
introduced the Home Retention and Economic Stabilization Act that calls
for a 9-month moratorium on foreclosures for responsible homeowners.
Yesterday, I reintroduced the same bill, along with Senator Menendez
in the Senate. I will continue to actively pursue a meaningful
moratorium on foreclosures in the coming days and months.
Until then, a timeout in foreclosures is a necessary stop-gap measure
that will give Congress, regulators, and homeowners some breathing room
while everyone works to craft a fair, sensible, and lasting solution to
the foreclosure crisis. I hope that my colleagues will join me in
supporting this amendment.
I reserve the remainder of my time.
Mr. GARRETT of New Jersey. Mr. Chairman, I claim the time in
opposition.
The Acting CHAIR. The gentleman from New Jersey is recognized for 5
minutes.
Mr. GARRETT of New Jersey. I yield myself 2 minutes.
First of all, I begin by saying I appreciate the sponsor's intent
behind the amendment. She and I join in the thought that we need to do
all that we possibly can to deal with the terrible situation of the
economy right now, and she is right that the subprime issue and the
foreclosure issue is at the heart of the housing prices and the heart
of the economic crisis that we have right now.
The question is, what do we do about it? And the question is, what do
we do about it in a manner to help both those people who have been
paying on time and also help those people who are perhaps in a
difficult situation?
The amendment, though, as it's currently written, may have an
unintended effect. If you effectively allow for an extended period of
moratorium on foreclosure, that may actually have the potential of
encouraging people from actually going to the bank to try to work
things out. Or maybe it's not encouraging, not just encouraging them
enough to do what is appropriate during this period of time.
I would ask the gentlelady a question, though.
In the form of the amendment, besides the potential policy problems,
it would appear that the amendment is flawed technically, and for that
reason unworkable. If I look at page 2--and if she would refer to
that--it's set up not as a sense of Congress, which, I believe, is the
intention behind this bill, but rather as language which would have the
force of law. Page 2, section C, ``duty of the consumer to maintain
property.'' It goes on to say that any homeowner whose benefit in
foreclosure proceeding or sale is ``barred under subsection A,'' and it
makes references to other sections of the law.
The question is, how can a sense of Congress, therefore, actually
have the effect of law?
So is this an amendment that maybe has the best of intentions but was
drafted in a manner that potentially would have the effect of law even
though it is not a law, it is merely a sense of Congress?
I would ask, then, in light of the fact that there is both the policy
reason that we may agree on but have some problems with but is
technically flawed, I would ask that the sponsor would consider
withdrawing the amendment at this time.
Ms. MATSUI. Mr. Chairman, I yield 1 minute to the chairman of the
committee.
Mr. FRANK of Massachusetts. I'll tell you what it's written to say.
We believe that it is entirely a sense of Congress but understand the
terrible harm that would come if it wasn't. Of course, the gentleman
says it's not going to become law, so why he's so concerned about it, I
don't know.
But if it did, here is what it would do: This terrible section,
here's what it does. It says that the borrower can't destroy the
property. We are in danger of being too strong in insisting on
protecting the lender. The language to which he objects--which he quite
understandably didn't read--says ``the homeowner may not, with respect
to any property, destroy, damage, or impair such property, allow it to
deteriorate or commit waste.''
So it may be that we have unduly argued that the borrower pending
this who's got a foreclosure shouldn't trash the property.
I will plead guilty to perhaps erring on the side of ambiguity in
imposing on the borrower an obligation not to trash the property.
Mr. GARRETT of New Jersey. I will yield myself just 1 more minute.
I can simply come to the floor and speak to what the experts have
testified in committee with problems of language of this nature. One
is, as I've already stated, experts have said that language like this
would encourage the situation for borrowers to not do the right thing,
that is, to call up their lenders and say, ``I have a problem, and I
want to engage in negotiations to try to work out the loan.''
We know this is an ongoing problem, and that's why there's so many
advertisements and like on TV right now to encourage people to do the
right thing. This language would be counterproductive in that, so the
experts say.
And secondly, the lenders have come to the committee and testified
before our committee that the longer the borrower remains delinquent,
the less
[[Page H357]]
likely he or she will be able to cure the delinquency and avoid
foreclosure.
All this is really doing is prolonging what should be dealt with
today. It's never to be put off to tomorrow what we should deal with
today, and this language, unfortunately, does just that.
With that, I reserve.
Ms. MATSUI. Mr. Chairman, how much time do I have remaining?
The Acting CHAIR. The gentlewoman from California has 1 minute
remaining. The gentleman from New Jersey has 2 minutes remaining.
Ms. MATSUI. Mr. Chairman, I would like to yield 1 minute to the
gentlelady from Florida (Ms. Castor).
Ms. CASTOR of Florida. Mr. Chairman, I rise in support of the Matsui-
Castor amendment. Congresswoman Matsui has summarized the amendment
very well, and I appreciate her leadership.
We all agree the housing crisis, foreclosures, and the related
disintegration of value in our neighborhoods must be addressed. We know
the statistics very well about the extent of the problem. And in
Florida, we have the second highest rate of foreclosures.
I did not support the $350 billion first tranche of the TARP because
I had no confidence in the Bush administration that they were going to
help homeowners and prevent foreclosures. I hoped and prayed that I was
wrong, but unfortunately, that has been borne out.
I'm now planning my fourth foreclosure workshop, and to the contrary,
rather than discouraging homeowners, here is what I found. They cannot
get the loss mitigation personnel on the phone. They want to work it
out. They want a little bit of breathing room. Now where it's a vicious
cycle because they've lost their job, they're looking for their second
part-time job, they need a little breathing room that this amendment
will provide.
They're not asking for a bailout. They're not asking for billions of
dollars that have gone to the financial institutions. They want a
little bit of a break.
Mr. GARRETT of New Jersey. Mr. Chairman, I yield myself 1 minute.
I appreciate the gentlelady's comments. We have done similar programs
such as that in talking to the people in the district as far as working
out, what have you.
Again, the experts--this is the third point I could have raised
before--the experts also tell us that a foreclosure moratorium, which
in essence is what we're talking about here, will have the unintended
side effect also of raising up the cost of mortgages in the future.
So what this means is for that individual who may be able to work out
a deal today because mortgage rates are, as we know, at historic low
rates, if this has the effect of law--which is actually how the
language is situated here--and the moratorium were to occur and
mortgage rates were to go up, by the time they actually sat down with
that facilitator at the bank and worked things out, they would find
that the mortgage rates unfortunately, due to the economies of the
nature of this bill, the rates are higher and they are at a
disadvantaged situation than they would be today.
Let's have the people encouraged to work out their mortgages today.
Work it out with their banks. I'm sure both sides of the aisle want to
use our offices to facilitate those communications as well when people
have problems contacting their banks. I know my office works, and I'm
sure your office does as well to try to get that contact with them.
And let's do that to get it done today and not put it off until
tomorrow.
The Acting CHAIR. The gentleman from New Jersey has 1 minute
remaining.
Does he yield that minute back?
Mr. GARRETT of New Jersey. I yield back.
The Acting CHAIR. All time for debate has expired.
The question is on the amendment offered by the gentlewoman from
California (Ms. Matsui).
The amendment was agreed to.
{time} 1215
Amendment No. 3 Offered by Mr. Hensarling
The Acting CHAIR. It is now in order to consider amendment No. 3
printed in House Report 111-3.
Mr. HENSARLING. Mr. Chairman, I have an amendment at the desk made in
order by the rule.
The Acting CHAIR. The Clerk will designate the amendment.
The text of the amendment is as follows:
Amendment No. 3 offered by Mr. Hensarling:
Page 11, strike lines 1 through 7.
The Acting CHAIR. Pursuant to House Resolution 62, the gentleman from
Texas (Mr. Hensarling) and a Member opposed each will control 5
minutes.
The Chair recognizes the gentleman from Texas.
Mr. HENSARLING. Mr. Chairman, I've listened carefully to the previous
speaker and comments from our distinguished chairman of the Financial
Services Committee. It's quite clear to me that, come early next week,
they're certainly going to miss President Bush. I don't know who
they're going to start to blame every problem in the universe on come
next week.
I didn't come here to engage in the blame game, but I certainly can't
let the chairman's comment pass as he said something to the effect that
President Obama is inheriting a problem created by President Bush.
Well, as the chairman knows, there's a lot of underlying causes to the
predicament we find ourselves in and I'm happy to debate them at a
later time, but I would also note that the economic policy of America
is determined substantially by this Congress, and the economy was doing
just fine until the Democrats took over Congress.
Now, Mr. Chairman, as I look at the bill that is before us, again,
there are certain areas where I agree with our distinguished chairman,
more accountability and more transparency tends to be a good thing. But
Mr. Chairman, there is a provision in here though that says the
``Secretary may require an observer in the board rooms for institutions
that receive TARP money.'' Now, Mr. Chairman, I've been around here for
a few years and although I have no doubt that everybody is well-meaning
in the legislation that they bring to the floor, my fear is that
today's ``may'' shall turn out to be tomorrow's ``shall.'' And my fear
is that today's ``observer'' will become tomorrow's ``suggester'' and
next week will become ``the mandator.'' I think this is a terrible,
terrible precedent. I think it bespeaks of industrial policy run by the
government. I think it puts, again, one more of those slippery stones
on that slippery slope to socialism.
And Mr. Chairman, what are they observing? I mean, what specific
policies have they been given to undertake by this United States
Congress? What are they observing? And what I observe, Mr. Chairman, is
that my reading of the legislation says that any ``assisted
institution'' as defined by any institution that receives ``any direct
or indirect recipient of assistance or benefit from TARP.'' And so I
hope that the distinguished chairman of the Financial Services
Committee, on his time, will enlighten us on his interpretation of how
he wrote the underlying bill. Because does this mean that any business
borrowing money from a bank under TARP will now be subject to an
observer of the Federal Government? Does this mean anyone who has an
insurance policy with AIG is now subject to an observer from the
Federal Government?
Since we have express language in here dealing with the auto
industry, I hope the chairman will answer the question, does this mean
that the Secretary of the Treasury can place an observer in every UAW
union hall across the Nation if they receive monies under TARP?
Now, again, I have no doubt that, although I disagree with the
chairman on a number of issues, I know that his purpose is a noble one.
But I also know, Mr. Chairman, that when things begin in Washington,
they don't always end the way that they started. And so I would
question, number one--you know, we were told at one time Social
Security would be solvent forever; well, it's not. We were told that
TRIA was a temporary program; well, it's not. We were told Fannie and
Freddie would never be bailed out. And I'm sure those who said it meant
it at the time, but circumstances change, they were bailed out. We were
told that once House Democrats took over control, that they would rein
in spending and balance the budget, and now we have the largest deficit
in American history.
So I'm fearful that this provision will grow into something that
maybe it's
[[Page H358]]
not intended, not something that I would appreciate. And I'm also very
curious why so many other accountability provisions dealing with home
borrowers have seemingly fallen out of the bill, including one that the
chairman agreed to earlier--I believe it was in April in the markup of
the Hope for Homeowners program--when he accepted the amendment now,
but seemingly is taking it out of the bill at this point.
Mr. Chairman, I reserve the balance of my time.
Mr. FRANK of Massachusetts. Mr. Chairman, I rise to claim the time in
opposition.
The Acting CHAIR. The gentleman from Massachusetts is recognized
for----
Mr. FRANK of Massachusetts. How much time did the gentleman consume?
The Acting CHAIR. 5 minutes.
Mr. FRANK of Massachusetts. Mr. Chairman, I am struck by the implicit
endorsement of this amendment that I received from my friend from
Texas. He opposed the amendment by talking not about what it does, but
what might happen later on in a way very different from it. He did not
appear to have much objection to the amendment itself. He is talking
about, if we do this, it might lead to something else. Well, at that
point object to something else.
The argument that I'm against this because it will lead to something
else almost always comes from Members who don't like the provision
under debate, feel uncomfortable in explaining why, so they, therefore,
debate a straw man. Yes, there were Members who wanted it to be
mandatory that we put someone on the board of directors; I thought that
was inappropriate. I don't think a Federal official with the political
pressures to which he or she will be suffered should be voting as a
member of the board of directors. There were others who wanted to
require an observer in every case. We came to what I think is a very
moderate approach, to give the Secretary of the Treasury the
discretionary authority to do it. There may be some cases where it is
important, some where you could forgo it.
The fact that the budget deficit went up does not seem to be an
argument against giving the Secretary of the Treasury a discretionary
observer at institutions that receive any help under the TARP. And the
fact that the gentleman would cite the budget deficit and terrorism
risk insurance and what happened to them as reasons not to deal with
something entirely different because as they change this might change
does not meet my logical standards.
Now, I will say, by the way, with terrorism risk insurance, as an
advocate of it--along with the former chairman of the committee, Mr.
Oxley--I never said that it would be temporary. I believe that there
is, in fact, a public responsibility to deal with terrorism, and I
didn't feel it was going to go away. But in any case, it's an
irrelevancy.
Here's the proposal: To give the Secretary of the Treasury
discretionary authority to send an observer with the right to sit in on
meetings if he believes that it is justified in the particular set of
circumstances. It's not a voting member, and it's not mandatory in all
cases. I find it hard to see what harm it would do; so, apparently,
does my friend from Texas. Because if he were clear about the harm that
would do, he would have documented that. Instead, he talked not about
the harm that might come from this amendment, but from harm that might
come at a future date when something very different from this amendment
was put into effect. By the way, this could not grow in an evolutionary
fashion; it would take a vote of the Congress to require this. This
would not be something that happens accidentally; it would be something
that would take a conscious decision.
What we are saying here is we want more accountability. We are saying
that we have some confidence in the Obama administration. And again, we
are at the central issue here. Many of us believe that President Bush's
administration did not use this authority as well as they should have.
By the way, I agree with the administration that we are still better
off than they would have been if they had not had the authority at all,
but we thought it could have been used even better. The central
question we will be addressing next week is; do we deny to the new
President tools that the old President had that many think he misused?
This bill is a subordinate, it says this; should we tell the new
President that, while we in the House believe he should have the
opportunity to deploy these tools, we have very clear ideas about what
should be done about it?
And we have done several hearings. This has been a very participatory
process. I was pleased with the gentleman from California (Mr.
Campbell) yesterday, the gentleman from Illinois (Mr. Schock) today,
both talked about things that are positive in this.
We have opened ourselves up and have accepted a large number of
proposals from Members on both sides. There will be an amendment
offered later by the gentleman from Arizona (Mr. Flake) that I intend
to vote for and I hope the House will overwhelmingly adopt. So we are
trying to move forward.
If Members want to debate what we are doing or not doing, that's
reasonable; but let me just close by saying here's where we are: We are
proposing that the Secretary of the Treasury in the new administration
have a discretionary right to send an observer to recipients of TARP
funds where he thinks that would be appropriate. The gentleman from
Texas says don't do that because TRIA became permanent, and we have a
bigger budget deficit. And I guess hair doesn't grow on certain parts
of the body. None of these have anything to do with the issue under
consideration. And the absence of arguments against this, what the
amendment proposes, gives me a sense of confidence that it's really
pretty hard to criticize.
Mr. Chairman, I yield back the balance of my time.
Mr. HENSARLING. Perhaps the chairman did not hear all of my remarks--
--
Mr. FRANK of Massachusetts. Parliamentary inquiry.
The Acting CHAIR.
Does the gentleman from Texas yield for a parliamentary inquiry?
Mr. HENSARLING. I do not.
Mr. FRANK of Massachusetts. Point of order, Mr. Chairman.
The Acting CHAIR. The gentleman from Massachusetts will state his
point of order.
Mr. FRANK of Massachusetts. I was told that the gentleman's time had
expired. I have a right to close. I waived that because I was told that
the gentleman had consumed 5 minutes when I asked. I thought that was
all there was on the amendment.
The Acting CHAIR. No. The gentleman from Texas had 30 seconds
remaining. The Chair understood the question to be--or at least the
answer provided was--how much time the gentleman from Massachusetts
had, which was 5 minutes.
Mr. FRANK of Massachusetts. Oh. I apologize for my diction because I
thought that I had asked how much time he had consumed.
The Acting CHAIR. And the Chair apologies for any misunderstanding.
The gentleman from Texas has 30 seconds remaining to close.
Mr. HENSARLING. Again, perhaps the chairman of the committee missed
some of my remarks. My concern is the way that this is drafted is we
are giving the Secretary of Treasury the power to put an observer into
every small business in America who borrows money from a community bank
that gets TARP funds. That isn't what might happen, that is what does
happen. And when the chairman says he's concerned about accountability,
I wonder why doesn't that go to the borrower side. Why is he striking
that portion of the bill that has borrower certification that they did
not intentionally default on their mortgage? Why does this bill strike
the fine or imprisonment for borrowers who make willful, false
statements? Why does he strike the requirement of those who are found
to have committed mortgage fraud, that they have to expunge any direct
financial benefit? So it's kind of selective concern, I would say.
The Acting CHAIR. The time of the gentleman has expired.
Mr. FRANK of Massachusetts. Parliamentary inquiry, Mr. Chairman.
The Acting CHAIR. The gentleman from Massachusetts will state his
parliamentary inquiry.
Mr. FRANK of Massachusetts. Do I have any time remaining?
[[Page H359]]
The Acting CHAIR. The gentleman from Massachusetts yielded back the
balance of his time.
Mr. FRANK of Massachusetts. Mr. Chairman, I did that, but I did that
because I had asked--as I think the transcript would show--how much
time he had consumed. We apparently had a miscommunication. So I would
ask unanimous consent that any remaining time be allowed.
The Acting CHAIR. Is there objection to the request of the gentleman
from Massachusetts?
There was no objection.
The Acting CHAIR. The gentleman from Massachusetts is recognized for
the 10 seconds remaining before he yielded back the balance of his
time.
Mr. FRANK of Massachusetts. I will use the 10 seconds to say that the
gentleman from Texas said ``may'' may become ``shall.'' ``May'' does
not become ``shall'' without our voting.
The Acting CHAIR. The question is on the amendment offered by the
gentleman from Texas (Mr. Hensarling).
The question was taken; and the Acting Chair announced that the noes
appeared to have it.
Mr. HENSARLING. Mr. Chairman, I demand a recorded vote.
The Acting CHAIR. Pursuant to clause 6 of rule XVIII, further
proceedings on the amendment offered by the gentleman from Texas will
be postponed.
The Acting CHAIR. The Committee will rise informally.
The SPEAKER pro tempore (Mr. Higgins) assumed the chair.
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