[Congressional Record Volume 155, Number 65 (Thursday, April 30, 2009)]
[Senate]
[Pages S4915-S4938]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




             HELPING FAMILIES SAVE THEIR HOMES ACT OF 2009

  The ACTING PRESIDENT pro tempore. Under the previous order, the 
Senate will proceed to the consideration of S. 896, which the clerk 
will report.
  The legislative clerk read as follows:

       A bill (S. 896) to prevent mortgage foreclosures and 
     enhance mortgage credit availability.

  The ACTING PRESIDENT pro tempore. Under the previous order, the 
Senator from Illinois, Mr. Durbin, is recognized to offer an amendment 
on which there will be 4 hours of debate equally divided.


                           Amendment No. 1014

  (Purpose: To prevent mortgage foreclosures and preserve home values)

  Mr. DURBIN. Madam President, I have an amendment at the desk.
  The ACTING PRESIDENT pro tempore. The clerk will report.
  The legislative clerk read as follows:

       The Senator from Illinois [Mr. Durbin], for himself, Mr. 
     Dodd, Mr. Reid, Mr. Schumer, Mr. Whitehouse, and Mr. Harkin, 
     proposes an amendment numbered 1014.

  (The amendment is printed in today's Record under ``Text of 
Amendments.'')
  Mr. DURBIN. Madam President, America is facing a crisis, and this is 
what it looks like: Two buildings next to one another, one a well-kept 
home; next door, a foreclosed property, boarded up, vacant, vandalized. 
Sadly, this is a crisis which is affecting every community in America. 
I have seen it in the streets of Chicago. I have seen it in suburban 
towns. I have seen it in my downstate communities.
  Madam President, 8.1 million homes are facing foreclosure in America 
today. That isn't my estimate, it is the estimate of Moody's. They are 
supposed to be good predictors of our economy. What does 8.1 million 
foreclosed homes represent? One out of every six home mortgages in 
America in foreclosure--one out of every six. It is a reality. It is a 
reality that affects the five out of six, our homes where we continue 
to make our mortgage payments and wonder what the problem is. Why is 
the value of my home going down? I am making the payments. It is going 
down because, sadly, somewhere on your block is another home in 
foreclosure, boarded up, an eyesore at best, a haven for criminal 
activity at worst--a reality that continues to grow.
  Two years ago, before we even started in on this crisis as we know 
it, I proposed a change in the bankruptcy law, a change which I think 
could have forestalled this crisis we know today. Along the way, there 
has been resistance to this change. By whom? The banks that brought us 
this crisis in America have resisted this change to do something about 
mortgage foreclosure. That is a fact.
  Last year, I offered this amendment to change the bankruptcy law, and 
the banking community said: Totally unnecessary; we don't need this 
kind of a change. This mortgage foreclosure is not going to be all that 
bad.
  In fact, the estimates were of only 2 million homes in foreclosure 
last year from our friends in the banking community, the so-called 
experts. Here we are a year later. The estimate is now up to 8 million 
homes in foreclosure.
  Who are these people facing foreclosure? Were they speculators and 
investors who were buying up properties and they thought that maybe 
they would double in value and they could quickly sell them? There may 
be a handful of those folks out there. By and large, they are 
families--families who are trying to keep it together,

[[Page S4916]]

under a roof, the most important asset they own, their home, trying to 
make payments when they discovered that the mortgage that was peddled 
to them by the same banking industry and mortgage banking industry 
turned out to be a fraud on its face.
  We remember the heyday of all this activity. They would tell people: 
Come on in. Call this 800 number. We can let you finance and refinance. 
We have a deal for you.
  People would show up at these mortgage brokers, and they would say: 
How much money do you make?
  The guy would say: So many thousand dollars.
  They would say: Oh, you are perfect. We have just the mortgage that 
will put you in this home, keep you in this home, or let you borrow 
money on this home.
  The person would say: Do you need some proof? Do you need some 
documentation?
  No, no, no, your word is good enough. No-doc mortgages.
  In no time at all, they would be sitting at a closing. I have been to 
quite a few of them myself as a lawyer and buying a few properties in 
my own life. They give them a stack of papers--you know what I am 
talking about, a stack of papers--and they would turn the corners and 
say: Just keep signing it. Sign it.
  What is it?
  Oh, government forms, standard boilerplate. I could read it to you, 
but we want to get out of here in the next half hour. Keep signing, you 
keep signing.
  At the end of the day, they say: In 60 days, first payment. You are 
going to love this place.
  Out the door, and in comes another couple. That is what it was all 
about.
  Then what happened 12 months later, 2 years later? That mystery 
mortgage kind of exploded in their face. All of a sudden, they were 
facing terms in that mortgage that were absolutely incomprehensible and 
unsustainable. They could not make the payments on it. The interest 
rates were going up too high. They called them subprime mortgages. That 
was the initial onslaught of this housing crisis in America. But then 
it grew into a lot of other mortgages too.
  I told the story before--and it is worth repeating--of the flight 
attendant I met on a United flight flying from Washington to Chicago. 
After she did her chores on the plane and there was a quiet moment, she 
came and knelt down in the aisle next to me.
  Senator, I have a problem. I am a single mom with three kids. I live 
out in the suburbs. I have worked for this airline for 20 years. I have 
been a good employee, always show up for work. I take it seriously. I 
have my little home out there, but I have a problem. My interest rate 
on my mortgage is too high. I need to take advantage of lower interest 
rates that are now available. If I can get down to a lower interest 
rate, a lower monthly payment, I can keep my home. But if I don't, I am 
going to lose it. I can't make ends meet. I can't keep it together. 
What am I supposed to do? They say I am underwater?
  Do you know what that means? The value of your home is less than the 
mortgage principal today. It has happened to a lot of people.
  Do you know what I told her: Sadly, I don't have an answer for you. 
If that bank will not bring you in, sit you down at a desk, and 
renegotiate the terms of that mortgage, you are about to go through the 
most painful, torturous path in your life. You are forced into default 
on your mortgage, you cannot make the payments, you become delinquent, 
receive the notice of foreclosure, and then it just goes from bad to 
worse.
  Madam President, 8 million American stories, 8 million foreclosures. 
What we are offering today is the only proposal before the Senate which 
gives us a chance to do something about this crisis. It is the only 
thing that can change the dynamic which continues to eat at the heart 
of our economy which adds foreclosure upon foreclosure and completely 
paralyzes the housing industry in America. That is at the heart of this 
recession. That was the canary in the coal mine. That is what triggered 
where we are today, and it is still there and getting worse.
  I sat down 2 years ago with the banking industry and said to them: We 
have to do something.
  I can recall conversations with Henry Paulson from Wall Street, 
Secretary of the Treasury under President George W. Bush, where I said 
to Mr. Paulson: I know you wanted to save the banks, but how about 
saving the homeowners? What are we going to do about the mortgage 
foreclosure? Well, we will get to that later; or, it is not a problem. 
He kept putting me off and putting me off. He put me off, but he didn't 
put off the crisis.

  Why is it in this country, in America, that we can find hundreds of 
billions of taxpayers' dollars from hard-working people all over the 
United States to come to the rescue of bad banking decisions, rotten 
investments, mortgages that were fraudulent on their face, but can't 
summon the political will to do something about 8 million families in 
America who are going to face foreclosure? That is where we are.
  When I sat down with the banks, I said: I will work with you. Let us 
find a reasonable way so we can bring people to the table--such as that 
flight attendant--and find a way to work it through. Because at the end 
of the day, a foreclosure isn't good for anyone. A family loses their 
home, a neighborhood is ravaged by vacant property, the people next 
door lose the value of their home, the bank spends $50,000, at a 
minimum, for expenses in a foreclosure, and then 99 percent of these 
boarded-up buildings, these foreclosed homes, are the property of a 
bank. How much time is that bank spending on that property? How much 
worry do they have about the value of the neighbor's home? The answer 
is none. Banks aren't in the business of putting in windows and 
establishing security and cutting the grass and making the property 
look good. They move money around. But now they are becoming property 
owners of the most blighted properties in America.
  Some banks are walking away from it, incidentally. The banks are 
walking away from the foreclosed property. I sat down with them and 
said: How can this be good for a bank? How can this be good for a 
family? How can this be good for the Nation? Let's sit down and work 
together. But I come today to the floor to tell you that despite months 
and months of heroic effort by my staff--Brad McConnell, who is here 
and who has worked tirelessly on this issue--and my own efforts to 
reach out to the banking community, only one bank is supporting this 
amendment to do something about foreclosure in America--one bank: 
Citigroup.
  I can't tell you how many of these bankers have walked away. The 
American Bankers Association has been terrible--terrible. They will not 
even participate in a negotiation on dealing with this foreclosure 
crisis. The Community Bankers of America, a group I have respected over 
the years because they are closer to the people; they are the hometown 
banks--have walked away as well. They are not interested in this 
conversation, they say. The credit unions? Well, I will give them some 
credit. They did try. But in the end, they walked away as well. The big 
banks--JPMorgan Chase, you see them all over the United States--they 
were at the table until last week and then decided: No, we are going to 
walk away too. We are not interested in this conversation. Wells Fargo, 
Bank of America, and the list goes on and on.
  If any of these names sound familiar, it is because they are 
surviving today due to taxpayer dollars. And you know what they say 
about these poor people who have lost their homes? It was a bad 
business judgment and people have to pay for their bad business 
judgments. Really? How many of these bankers paid for their bad 
business judgments, with their multimillion dollar bonuses, with the 
rescues we have provided from American taxpayers--hard-earned tax 
dollars sent their way? The fact is we have been kind to these bankers 
who have brought us into this crisis. Yet they are literally shunning 
and stiff-arming the people who are facing foreclosure. These banks 
that are too big to fail say that 8 million Americans facing 
foreclosure are too little to count in our political process, and they 
have walked out the door.
  Well, I want to tell you, this amendment I am offering can save the 
homes of 1.7 million families. I wish we could save more, but the fact 
is we have this opportunity before us, and I think it is something we 
shouldn't ignore and we

[[Page S4917]]

should support. Some Members of the Senate voted against my amendment a 
year ago. I understand that. I heard them. They said: You have to sit 
with the banks and see if you can work something out. Well, we did, 
until they walked away.
  What we offer today is significantly different than what we offered a 
year ago. We literally give to the banks control over whether a family 
in foreclosure can go into bankruptcy. We say that anybody facing 
foreclosure--who is delinquent for at least 60 days on a home that is 
valued at no more than $729,000, with a mortgage that was written no 
later than 2008--has to show up at the bank at least 45 days before 
they file bankruptcy and present all the economic information, all the 
financial documents the bank would need for a mortgage--proof of 
income, indication of net worth. If the bank at that point offers them 
a renegotiated mortgage--a mortgage which will basically allow them to 
stay in the home, that reduces the borrower's mortgage debt-to-income 
ratio to 31 percent, which is the standard the administration is 
talking about, or offers hope for home refinancing--another program--
and the person facing foreclosure does not take that offer, then that 
same family in foreclosure cannot use the bankruptcy court to rewrite 
the mortgage. So in other words, the banks ultimately have the key to 
the courthouse. If they make the offer and it is turned down, that is 
the end of the story.
  What happens if they do not make the offer? Under this law, we would 
change the Bankruptcy Code as follows: Under the current bankruptcy 
law, if you are deep in debt and facing foreclosure, and you own 
several pieces of real estate--your home, a vacation condo in Florida, 
a vacation condo in Aspen, CO, and you are facing foreclosure on all 
three properties because of economic problems--you can walk into that 
bankruptcy court and the judge can say we will renegotiate the terms of 
the mortgage on the Aspen, CO, property--we will reduce the principal 
of the mortgage to the fair market value, the interest rate will be the 
current interest rate, we will add a little to it, and so forth and so 
on. The bankruptcy judge has that power for the Florida property and 
for the Colorado property. But the law prohibits the bankruptcy court 
from rewriting the terms of the mortgage of a person's home. Why? Why 
does that make any sense? If the bankruptcy court can rewrite the 
mortgage on your vacation condos, your farm, or your ranch, why can't 
they do it for your home? That is what this bill does. It gives the 
bankruptcy court that power. And in creating that power, it says to the 
bankers: Get serious.
  The voluntary plans we have had for refinancing mortgages in 
foreclosure across America have been an abject failure. We have to have 
an opportunity here for the bankruptcy court to step in and make a 
difference, and that is what we are trying to achieve with this.
  I know my colleague, the Senator from California, is here on the 
floor, and I will yield to her in a moment. I have to leave the Chamber 
myself. But that is what we are proposing today. It is an amendment 
which we have worked on long and hard. It is an amendment which I think 
should be looked at in honest terms. My goal is not to put more people 
in bankruptcy court. My goal is to avoid it. Put them at the table with 
the banker at least 45 days in advance, avoid the bankruptcy court, 
avoid the foreclosure, avoid the boarded-up and burned-out building 
that happens to be right next door to the home you have worked so hard 
to keep and to maintain.
  The Mortgage Bankers Association has claimed, in front of the Senate 
Judiciary Committee, that this is going to add cost to everybody's 
mortgage if in fact some people can turn to bankruptcy court. Let me 
first say that future borrowers aren't even eligible for this 
bankruptcy assistance. It ends as of January 1, 2009. Future mortgages, 
future foreclosures aren't even affected by it. It has an ending date.
  We also have a quote--and I don't have time to read in detail here--
from Adam Levitin, who has analyzed this and says the argument that 
interest rates will go up because of this provision is plain wrong.
  Secondly, they argue that changing the Bankruptcy Code will cause 
uncertainty in the market. The American Bankers Association says it 
will add risk. I will tell you this: If you want uncertainty in the 
market, keep the foreclosures coming, one after another. Let them hit 
your neighborhood. Uncertainty about your home and its value and 
whether you can sell it is the reality of what they will face.

  They say bankruptcy judges shouldn't be allowed to break the sanctity 
of the contract. Before we argue about the sanctity of a no-doc 
mortgage, before we argue about some of the predatory lending practices 
that led to this mess, let me tell you that the bankruptcy court takes 
on contracts every single day. That is the nature of the bankruptcy 
court. To me, that is an argument which goes nowhere.
  They argue that allowing borrowers to modify mortgages in bankruptcy 
would shield them from the consequences of poor decisions. They call it 
the ``moral hazard.'' In other words, take your medicine, America. You 
made a bad mortgage, you pay the price. That didn't apply when it came 
to bailing out these banks when we were asked for $700 billion to make 
up for the mistakes of these banks. Where is the moral hazard there, as 
they run off with their parachutes and their bonuses? I don't buy that 
argument whatsoever.
  Finally, they argue that restricting this amendment to subprime and 
exotic loans is a better way to do it. Well, I can tell you, we know 
that isn't going to work. There are too many mortgages now in peril, 
way beyond the original subprime mortgages. And how do we explain to 
our constituents that we are providing special assistance to borrowers 
who took out a risky loan, such as a subprime, and ignoring those who 
have been trapped in other mortgages that create a disaster?
  I am going to yield the floor to my colleague from California, and 
thank her for coming, and I want to tell you something: Her State has 
been hit harder than any other State. You ought to see what has 
happened in portions of California. She knows this issue personally, 
and I thank her, and I yield the floor to Senator Boxer.
  The PRESIDING OFFICER (Mr. Kaufman). The Chair recognizes the Senator 
from California.
  Mrs. BOXER. I thank the Chair, and before my colleague leaves the 
floor--and I have only 10 minutes, because of all the responsibilities 
we all have. I have to be somewhere in 15 minutes--I am here to stand 
with you, Senator Durbin, in your courageous effort to stop thousands 
and thousands of homes from foreclosure and, frankly, to get to the 
bottom of this economic recession.
  We know, because economists have told us, that the problems we are 
facing all start with the fact that we have had a collapse in the 
housing market. And, my friend, what you have done is you have taken on 
the special interests in a way that is very clear. I can only say that 
I hope when the votes are counted, the people who serve in the Senate 
do the right thing and support the Durbin amendment.
  Mr. President, I stood on the floor of the Senate when we debated the 
Foreclosure Prevention Act a year ago--a year ago--and I described how 
hard the foreclosure crisis was hitting this Nation, in particular my 
State of California, the largest State in the Union. And as we know, 
what happens in California, good and bad, spreads throughout the 
country. They say when California sneezes, everybody else gets a cold. 
The truth is we are having great problems in California, starting with 
the housing crisis.
  I am sorry to say that a year later, after I stood here and said this 
is a crisis we must address and must address in a far-reaching way, the 
situation is bad and, frankly, it could well get worse. If we turn our 
back on the Durbin amendment, it will surely get worse. Foreclosure 
filings were higher in 2007 than they were in 2006. They were higher 
still in 2008. And they are at a pace that is going to have them go 
even higher in 2009. One year ago, when I stood on this floor, we were 
expecting then 2 million homes to be lost to foreclosure over the 
course of the crisis. Now that number is expected to be over 8 million 
homes. If we turn our back on the Durbin amendment, what we are 
essentially saying is: Oh, the status quo is fine. It is all working 
out.
  The Durbin amendment is a very moderate amendment. It basically says

[[Page S4918]]

if a bank and a borrower don't sit down and try to renegotiate a 
mortgage and reach an agreement on how they can restructure that 
mortgage so the borrower can stay in the home--and the restructuring is 
very clear; it should be about 31 percent of income--if that effort is 
not undertaken and the borrower files for bankruptcy, the judge can 
look at how to restructure that mortgage. I do not understand how 
anyone could vote no on this, except if they are dancing to the tune of 
the banks.
  Let me say this: I work with the banks in my State. I respect them, 
when they are doing the right thing, when they are acting in the public 
interest, when they are lending to people who deserve to have those 
loans, when they are not redlining, when they are being fair. I support 
them wholeheartedly. Oftentimes they are very good neighbors and they 
donate to charities in the counties, in the communities, in the State 
of California. But when they are wrong, they are wrong. For them to not 
work with Senator Durbin and to walk out of the room when he has 
modified his proposal in such a way that it is so reasonable? As 
Senator Durbin has said: When someone goes into bankruptcy the judge 
can look at everything, all of their assets--their second homes, their 
furniture, their cars. But they are prohibited from looking at that 
first and, by the way, most important asset--the home residence. Why? 
Because banks over the years have said we do not want our books to look 
worse, we don't want to take any losses, and we are not willing to 
budge.

  This is a crisis. All of the fallout in the financial sector comes 
down to the fact that there were entire new instruments created around 
the value of a home: derivatives, all kinds of paper, all kinds of 
insurance--all on top of a home. So when the home goes, it goes. The 
house of cards falls. That is what has happened and one of the reasons 
is these foreclosures. We can stop a lot of these foreclosures if we 
adopt the Durbin amendment.
  My State is having a very hard time. We can see the number of 
seriously delinquent homes in my State going up here on this chart. 
This is 2008. All the way up here is over 8 percent and the actual 
foreclosures at over 4 percent. This is, in many ways, a virus that is 
spreading. What happens when a home is abandoned and no one cares about 
it because many times the banks let it go? Frankly, the mortgage is 
held by so many people that nobody makes sure the home is kept up, that 
the pool doesn't become a hazard in the community. We have pictures I 
showed the last time of a vacant pool being used by kids as a 
skateboard park. That was probably one of the better things that was 
happening in the neighborhood. Homes are being looted. The value of the 
next-door home goes down and the crisis continues to spread.
  Look at what is happening in my State. One out of every 24 homes in 
Merced has filed for foreclosure. In Stockton, 1 out of 27. Riverside-
San Bernardino, 1 out of 28. Modesto, 1 out of 29 homes.
  When you go to these beautiful areas of my State, 1 out of 27 homes 
in Stockton has filed for foreclosure. In Bakersfield, 1 out of 37; 
Vallejo, 1 out of 37; Sacramento, 1 out of 47. It goes on and on and it 
is getting worse, and the Durbin amendment will help us. Why? These are 
just numbers. There are families in these homes, obviously. If they 
have a chance to restructure their mortgage, then they might well want 
to use the opportunity to do so in a bankruptcy court.
  We all know that our home--those of us who have been fortunate enough 
to buy a home--in many cases is our biggest asset. When that home goes 
down in value, that is bad enough. But when we are in a mortgage that 
suddenly ticks up and we cannot afford to stay in our home and we 
suddenly lose our job and have to take a job that is a lower paying 
job, because of the ramifications that this is having on the economy, 
we are in trouble and our families are in trouble.
  At the end of March, Californians experienced 363,891 foreclosures 
since 2007. Think about it, more than 300,000 of our families have 
experienced foreclosure since 2007. We had 6 of the top 10 and 13 of 
the top 20 metro areas with the worst foreclosure rates. Today we have 
another opportunity to help stem this crisis. If we miss this 
opportunity, it is our fault and we should be judged on this vote. That 
is how strongly I feel.
  The bill before us makes changes to the HOPE for Homeowners Program, 
such as reducing fees and administrative requirements to make the 
program more attractive to lenders and borrowers. It provides a safe 
harbor against lawsuits to protect servicers who participate in the 
mortgage modification program. That is all good and it is helpful. But 
the one piece that is missing is the Durbin amendment, which would 
allow borrowers at risk of foreclosure to receive assistance from the 
bankruptcy court in restructuring their loans so they can keep their 
families in their homes.
  I have met children who have said they cry themselves to sleep every 
night because they think they are going to lose their home, and their 
home is their castle.
  For us to turn our back on the Durbin amendment for some rationale 
that, when stripped away, comes down to ``because the banks don't like 
it,'' would be a travesty of justice for these children.
  I believe had Senator Durbin's proposal been passed last year we 
would have saved hundreds of thousands of homes nationwide. It is as 
simple as that.
  We are saving vacation homes. We are saving automobiles. We are 
saving all these other assets which a bankruptcy judge can in fact 
restructure. But the main thing we should be saving, the residential 
home, is not allowed to be brought up in bankruptcy unless we agree to 
the Durbin amendment.
  I have to say, Senator Durbin is a great negotiator. I have served 
with him in Congress since the 1980s and I know he listened to the 
bankers. I know he changed and modified his amendment consistent with 
what they said and consistent with President Obama's housing 
affordability plan. Again, the borrower cannot seek a modification 
through bankruptcy unless the borrower has gone to the lender and said 
let's negotiate. If that doesn't bear fruit, then they can bring it 
into the bankruptcy court.
  President Obama's housing plan gives great incentives to lenders to 
make loan modifications. But his plan also included the contingency 
that a borrower could seek relief through bankruptcy if all else fails. 
This is a critical additional incentive to ensure that lenders and, 
frankly, borrowers do the right thing. It says a borrower and a lender 
must sit down and try to resolve the mortgage problem before the 
borrower can go to court. We believe, even with the changes that 
Senator Durbin made, 1.7 million homeowners could have their homes 
saved.
  Let's think about it--1.7 million homeowners. Almost 2 million 
homeowners. That is larger than the populations of some of our States. 
We can help 1.7 million homeowners.
  We have allocated trillions of dollars to reduce the threat to the 
financial system posed by toxic assets. That was the hardest vote I had 
to make in my lifetime. It was hard. I lost sleep over that vote. But I 
was told by Ben Bernanke and Hank Paulson that the whole financial 
system could collapse around us, we would lose capitalism, we would 
lose our free market system, we would be in panic, and I voted yes to 
trillions of dollars, because I am very worried. I shouldn't say 
trillions--hundreds of billions.
  How do we look ourselves in the mirror if we have voted billions, 
hundreds of billions of dollars to save the banks, even though we know 
some of them have taken advantage of that, and companies such as AIG 
have taken advantage of it, and they have given these huge bonuses to 
people who do not deserve them? We know what a nightmare that is. But 
how do we do that in the name of saving the financial system and turn 
our backs on homeowners, middle-class people who are suffering because 
of the fallout of these bad financial decisions?
  If we bow to the banks on this amendment, I personally think it is a 
stain on this Senate, a stain that cannot be rubbed out. This is an 
amendment that is fair. This is an amendment that is modest. This is an 
amendment that has been negotiated. Senator Durbin has done everything 
in his power to reach agreement. What remains is a very modest 
amendment.

[[Page S4919]]

  I will close by again explaining it. The Durbin amendment basically 
says that when homeowners are in trouble and at risk of losing their 
home and going into bankruptcy, if those homeowners reach out to the 
lender and they sit down and try to renegotiate a package on those 
mortgage payments, if they do it in good faith but it doesn't work out, 
then and only then can a homeowner go to bankruptcy court and ask the 
judge to please help and restructure their mortgage.
  That passes every test of fairness. That passes every test that you 
would say an amendment should pass: fairness, justice, pragmatic, 
listening to both sides.
  I am here filled with hope that we can send a message today to the 
American people that we stand on the side of our families. Yes, we will 
work with the banks and try to get them to do the right thing. Dick 
Durbin has done so. But if they are stubborn and they will not agree, 
and because they are stubborn and they will not agree, it means this 
housing crisis will continue to deteriorate, I have to say I am going 
to be very sad if this Durbin amendment does not pass.
  This is the time to act. I said it a year ago. I predicted worse 
things would happen. I didn't do it out of whole cloth. We have the 
economists in our office, in our State, who see this. We need to act 
now or we will be back here in a year with the Durbin amendment. It 
will fly through here and people will say, and I predict: Gee, I was 
wrong.
  Let's not go there. Let's do this. It is the right thing to do. It 
makes this bill strong and it does what the President intended when he 
originally sent us his housing rescue plan.
  Mr. President, I want to say, although he is not on the floor, to our 
leader on this, Dick Durbin, how much I respect him and admire him. I 
know the courage it takes to stand up to the special interests. He has 
done it in behalf of the families of Illinois and this great Nation. I 
hope he will prevail on this amendment.
  Mr. President, I yield the floor and suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mrs. BOXER. Mr. President, I ask unanimous consent the order for the 
quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mrs. BOXER. I ask unanimous consent the time be equally divided on 
the quorum call.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mrs. BOXER. I now suggest the absence of a quorum.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. MERKLEY. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. MERKLEY. Mr. President, I rise today in strong support of the 
bankruptcy lifeline being offered by the senior Senator from Illinois. 
This bankruptcy lifeline is at the core of the housing bill passed by 
the House of Representatives and now under debate today in the Senate.
  In the last few years, millions of families were led into 
unsustainable home mortgages that pushed our country into an 
unprecedented economic crisis. With the collapse of the housing market, 
many are trapped in mortgages with unbearable interest rates and 
principal significantly higher than market values.
  No one wants to walk away from the home they purchased, with 
neighbors they like, a school their children are doing well in, a town 
they feel comfortable in, but many cannot afford to pay under the terms 
of the mortgage they currently hold.
  I have already spoken on this floor about the need to ban deceptive 
practices in mortgage brokering, practices that steer unknowing 
customers into complicated and expensive mortgages. A ban on steering 
payments and prepayment penalties would go a long way toward ensuring 
that we do not get into this situation again.
  But right now we are confronted with what to do about those who 
already put their life savings on the line to attain a slice of the 
American dream and who are on the verge of seeing that dream shattered.
  Unfortunately, we are now in the midst of a recession--there is 
little prospect of housing prices returning to their bubble levels for 
many years, and almost 50,000 Americans are losing their homes every 
week to foreclosure. This is a sad and destructive phenomenon. 
Foreclosure tears apart neighborhoods and destroys family savings. It 
also has proven to have a devastating effect on our financial system.
  In fact, subprime foreclosures are, as we all know, the primary 
reason our banks have been hemorrhaging money. The billions in write-
downs our banks have taken and the billions of taxpayer monies our 
government has placed into them is due to the collapse of the housing 
market and the decline in the value of subprime--and now prime--
residential mortgage-backed securities. All the TARP money in the world 
will do little for the banks unless and until we stabilize housing.
  Fortunately, we have begun to get on the right path with housing. The 
Obama administration's Making Home Affordable plan takes a commonsense 
approach of lower a borrower's monthly payments. Similarly, the Hope 
for Homeowners Act, with a few fixes, has great potential to help. But 
neither plan has the ability to take on the major problem still 
outstanding in the housing market--underwater mortgages. Senator 
Durbin's amendment before us today tackles the problem head-on.
  What does this amendment do? In practice, its main use will be to 
force loan servicers to sit down and genuinely negotiate a reasonable 
mortgage adjustment. My office gets calls every day from constituents 
in Oregon who can't get a response from their lender or loan servicer. 
One constituent called her bank 13 times and never was able to talk to 
the right person. Sadly, she, like so many others, ultimately lost her 
home.
  The Obama plan will improve the situation by offering a number of 
carrots to lenders and servicers. But we also need to hold out the 
possibility, when servicers don't respond, of providing a lifeline 
opportunity.
  My colleagues are all familiar with the program ``Who Wants to be a 
Millionaire?'' When there is no ability to answer the question, there 
is a lifeline. In this case, when there is no ability to connect with 
the servicer to have a conversation about a win-win solution--a 
solution that is right for the homeowner because they are able to stay 
in their home, a solution that is right for the mortgage owner because 
the mortgage continues to be paid, albeit at somewhat lower rates--it 
is still right because the mortgage owner doesn't benefit from 
foreclosure if they only get 50 cents on the dollar. This is a win-win 
win because investors affected by the Federal financial circumstances 
find an improved situation when fewer homes go into foreclosure. It is 
a win for the community because we don't have an empty house on the 
block driving prices down further. We have an opportunity that is right 
for the community and for the mortgage owner and for the homeowner and 
for the economy. That opportunity is before us today in this amendment.
  Certainly, even with adoption of this amendment, some families will 
need to enter bankruptcy, which is not an outcome we desire for any 
family but one that some may have to consider. Remember that this 
bankruptcy power is not extraordinary. A Federal bankruptcy judge 
already has the power to modify debt on a vacation home, an investment 
property, a credit card, a car loan, even a yacht. Why can't the court 
make any modification to a family's primary assets, the important piece 
of the American dream known as home ownership? I can think of no good 
reason.
  Some have argued that allowing judicial modification to mortgages on 
a primary residence could increase interest rates on future home loans, 
perhaps by as much as 2 percent. But does this stand up to examination? 
After the current bankruptcy court system was set up in the 1970s, some 
courts interpreted the Bankruptcy Code to give them authority over 
mortgages on primary residences. This divergence of practice went on 
until the early 1990s.

[[Page S4920]]

Thus, we have a living test case. Studies have been done examining the 
interest rates in both types of districts--those that allowed 
bankruptcy modification and those that did not--and found no difference 
in the interest rates. Even if they had, the amendment before us today 
would not present this problem because, in the course of conversation, 
in the course of working out an agreement, only loans originated before 
January 1, 2009, are eligible for bankruptcy modification, only 
existing loans, not loans going forward. This primary concern that has 
been raised has no merit.
  Let me emphasize, again, that reductions in principal negotiated in 
bankruptcy court will be good for the banking system. Credit Suisse 
estimates that 9 million families may lose their homes in the next 4 
years. Foreclosure is a disaster for the family. Large numbers of 
foreclosures destroy home values across neighborhoods. But from the 
lender's standpoint, foreclosure means they are likely to net only 50 
or so cents on the dollar. In the case of any homeowner with a reliable 
income--and chapter 13 bankruptcy is only for people with a continuing 
source of income--it is much better for the lender if the homeowner 
remains in their home and makes a monthly payment, even if it is at a 
somewhat reduced rate, rather than turning the keys and putting the 
property into foreclosure.
  A couple of additional points: This proposal will not cost the 
taxpayer one dollar, nor will it overwhelm the Federal bankruptcy 
courts. The same claims were made in 2005 prior to passage of the 
Bankruptcy Reform Act. But in fact, the courts have handled the 
increase in caseload quite successfully. My office has talked with 
bankruptcy judges, attorneys, academics across the country. All are 
confident that the court system can handle any increase in caseload 
that would result from this legislation.
  This legislation is important to Oregon. It is important to the 
citizens in my State. According to data compiled by Moody's Economy and 
the Center for Responsible Lending, without this bankruptcy lifeline, 
over 15,000 families will lose their homes to foreclosure. I imagine 
the situation is quite similar in every State. The cost of these 
foreclosures has been magnified several times over, costing those 
citizens whose homes neighbor the foreclosed sites nearly $1.5 billion 
in equity. That is in Oregon alone. Will those neighbors then be 
underwater with their homes worth less than what they owe on their 
house, and how long will this cycle continue?
  The bankruptcy lifeline amendment offers us a win-win solution. 
Forcing real mortgage modifications will keep Americans in their home, 
arrest the decline in property prices, and stabilize the balance sheets 
of banks.
  I urge colleagues, in the strongest possible terms, to provide this 
win-win opportunity. We have done so much to help Wall Street. It is 
time to help working families across America, keeping them in their 
homes and stabilizing the financial system.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from New York.
  Mr. SCHUMER. Mr. President, I compliment my colleague from Oregon on 
some excellent remarks. I thank him for being so steadfast in working 
toward this issue. He has spoken up many times at meetings and caucuses 
about it.
  I rise in support of this amendment that would alter the Bankruptcy 
Code to allow bankruptcy judges to modify primary home mortgages. By 
now we are all familiar with the problems. Too many people borrowed too 
much money from too many banks that were too willing to lend. There is 
plenty of blame to go around. Now millions of American families are 
facing foreclosure over the next few years as a result of exotic 
mortgage products such as 2-28s, pay-option ARMs, and interest-only 
loans that disguise the full cost of home ownership. We have been 
pushing banks to do loan modifications for more than 2 years now and, 
frankly, we don't have much to show for it.
  While I am optimistic the administration's plan will produce a 
significant improvement in modification efforts, it is also certain 
there will be intransigent servicers and investors who will try to 
block the process, to squeeze every last cent out of a home, even if 
that means it is costly for their family, their community, and the 
country at large.
  We have offered lenders and servicers plenty of carrots, but it is 
unfortunately clear we also need a stick. The reason the programs in 
the past have largely not worked is it was just carrots and no stick. 
We need both. That is what the legislation gives us, leverage to push 
servicers, lenders, and investors to act in the best interests of the 
economy as a whole.
  This amendment to the bankruptcy law is so important because of the 
changes the mortgage industry has undergone in the past few decades. It 
used to be that when one wanted a mortgage, they would go to their 
local bank where they would lend the money and collect payments for 30 
years. That meant if one ran into trouble, they had a familiar friendly 
face to turn to, someone who knew them and their family and who had an 
interest in helping work out the mortgage payments so they could stay 
in the home. It also meant the bank had an interest; one entity had an 
interest in the whole mortgage. It wasn't chopped up in so many pieces. 
That is what has happened.
  Over the past two decades, with the growth of securitization, it has 
all changed because the mortgage has been divided into pieces, sold off 
to investors around the world. They are often difficult to identify and 
impossible to contact. Their primary concern is squeezing every last 
cent out of the mortgage loan, whatever the impact on families, on 
homeowners. That means if the best outcome for even one of those 
investors is foreclosure, a homeowner is not likely to get the help he 
or she needs to stay in their home.
  One other point that is vital: It may be that there are 40 investors 
who each have a piece of the mortgage. It may be that 39 of them have 
an interest in a loan modification. But if that one intransigent 
investor, who probably got the highest rate of interest because he or 
she took the most risk, says no, the whole process comes to a halt--not 
only bad for the poor homeowner but bad for the other 39 investors. It 
is bad, most of all, for the economy as a whole. It is not that one 
intransigent investor might say: Look, I will lose all my money if 
there is a loan modification. If I sit and wait for 5 years, then maybe 
housing prices will come up to where they should be and I will get my 
money back. In the meanwhile, the economy goes down the drain for 
everyone, because the more foreclosures there are, the lower housing 
prices get. The lower housing prices get, the less likely banks are to 
lend. The less likely banks are to lend, the less money is in the 
economy. The recession gets worse and worse and worse.
  It is not only a problem for the homeowner when there is an 
intransigent bondholder who will not yield; it is a problem for the 
other investors who will lose money in foreclosure.
  It is a problem for the neighbors of the homeowner whose property 
values are going to decline and for the country as a whole since our 
housing markets are already inundated by a glut of unsold homes, 
driving down home prices and destabilizing the financial sector.
  How do you get that intransigent bondholder to the table? Well, there 
is a contract. We cannot break a contract by law. But the one place in 
the U.S. Constitution where a contract can be modified is bankruptcy 
court. Bankruptcy courts are the only constitutional way to overcome 
the securitization contracts and restore some power to the homeowner 
himself or herself.
  Moody's Economy.com estimates without this amendment 1.7 million loan 
modifications that would have happened will not occur. These figures 
show that 1.25 million homeowners whose servicers are unwilling or 
unable to help them will not have the protection of the bankruptcy 
courts, and almost half a million homeowners who would have gotten 
modification offers will not because servicers or investors will 
calculate that a foreclosure is worth more to them than a modification.
  The proposal is the result of weeks and weeks of talks that never 
yielded compromise that we hoped for. I see my colleague from the State 
of Illinois, Senator Durbin, in the Chamber, who worked so long and so 
hard on this

[[Page S4921]]

issue and deserves all of our thanks. He was in the middle of trying to 
get this done. Senator Dodd and myself tried to help but to no avail. 
It is clear that parts of the mortgage industry were never interested 
in meeting us halfway. As the negotiations went forward, they moved the 
goalposts back and back and back. And when concessions were made that 
were well beyond what anyone thought, they walked away because they 
never wanted to deal.
  Hindsight is wonderful. It is unclear if those who entered the 
discussion--at least some of them--ever entered in good faith. But the 
industry stakeholders, who obviously have the most to lose, ought not 
hold total sway. Just because they walked away from the table does not 
mean we cannot vote our conscience on a proposal that would help 
preserve the American dream for millions of families and get our 
economy going again.
  What makes me so eager for this proposal to pass, and why I worked 
long and hard, is that as much as I want to help individual 
homeowners--and, believe me, I do--our economy is at risk. Millions who 
might rent or have paid their mortgage could lose their jobs, and it 
all comes down to this proposal. Because if we decrease foreclosures, 
we will find a floor to the home market, which will then allow banks to 
lend, which will then get our economy going. It is like the knee bone; 
to the thigh bone; to the hip bone. Foreclosures are connected to the 
housing market; the housing market is connected to the health of banks; 
the health of banks is connected to the economy.
  So when President Obama announced his foreclosure prevention plan, it 
included lots of lucrative incentives to lure banks to participate, but 
it called for some tough medicine: this bankruptcy proposal. And both 
are needed. We need carrots and sticks. The President's housing plan 
will not be as effective if parts of it are sacrificed for political 
expediency. Loan servicers should not get to accept the parts of the 
President's plan they like and reject others. That was never the deal.
  To reject this proposal is to provide only sweeteners and no stick to 
get banks, servicers, and investors to modify troubled loans. The 
bottom line is fewer homes will be saved for American families. The 
defeat of this amendment would be a sad day for homeowners, for the 
housing market, for financial institutions, and for the overall 
economy. Allowing that to happen is unconscionable.
  I urge my colleagues to adopt this amendment. We have an opportunity 
to make a major dent in the housing crisis and prevent further declines 
in home prices.
  Let's understand, once again, the housing crisis remains at the core 
of our economic problems. As long as home prices continue to decline--
and without this legislation they are far more likely to--our economy 
remains at grave risk of further contraction. We cannot let this 
opportunity slip by.
  I yield the floor.
  The PRESIDING OFFICER (Mrs. Hagan). The Senator from New Mexico.
  Mr. UDALL of New Mexico. Madam President, I rise today because I 
believe the Durbin amendment we are considering today is more than a 
tool for solving America's current economic problems, it is the right 
thing to do for millions of American homeowners.
  Like many of you, I had the opportunity recently to spend 2 weeks 
with my constituents talking with people at townhalls and community 
get-togethers around New Mexico. I heard one message over and over. My 
constituents feel that too often America has one set of rules for the 
rich and powerful and a different set for working families.
  Wall Street can fail and still make millions. On Main Street, even 
people who work hard get dragged down. Irresponsible lenders thrive 
while credulous borrowers lose their homes. Everywhere you look, you 
see middle-class Americans paying for other people's mistakes. It does 
not seem fair.
  Of course, the law rarely contains an explicit double standard. But 
today we are dealing with a situation in which it does.
  If a real estate speculator borrows millions to buy a city block and 
then finds himself unable to pay, he can walk into court and ask the 
judge to reduce the principal on his loan.
  If a working mother borrows $30,000 to buy that first home for her 
children, she is stuck with that loan. If she has lost her job, she is 
stuck with that loan. If the value of her house has plummeted, she is 
stuck with that loan. If she was the victim of predatory lending, she 
is stuck with that loan.
  I have yet to hear a good reason why that working American should not 
have the same rights as every real estate speculator and vacation 
homeowner in this country. My constituents do not think that is fair. 
And you know they are right.
  Sometimes you hear people defend unfair rules because they are good 
for the overall economy. They say that efficiency should be prized over 
equity. But that argument does not work here. By limiting judges' 
ability to reduce the principal on home loans, we are delaying the 
resolution of this country's mortgage crisis. Homeowners continue to 
struggle with loans they cannot pay, and the toxic assets based on 
those loans remain on the balance sheets of America's financial 
institutions.
  Elizabeth Warren, the head of TARP'S Congressional Oversight Panel, 
has made the point very clearly. She says:

       The law recognizes everywhere the importance, in a 
     financial crisis, of recognizing losses, taking the hit and 
     moving on.

  That is why she supports the mortgage modification provision we are 
considering today. When judges have the power to provide a fair 
resolution for banks and borrowers, we will be one step closer to 
recognizing those losses in our housing sector, taking the hit, and 
moving on. In other words, the Durbin amendment puts us one step closer 
to fixing the financial system. For this proposal's benefits will not 
be felt primarily on Wall Street. Credit Suisse estimates that as many 
as one in six mortgages in America will be lost to foreclosure in the 
next 4 years. Homeowners know what happens when a neighbor goes into 
foreclosure. The whole neighborhood takes a hit. Property values drop. 
Local governments face another drain on their resources. In some cases, 
the foreclosed property becomes a magnet for crime and an embarrassment 
to the community.

  For most Americans, their home is their largest investment. The best 
way to protect this investment is to stop unnecessary foreclosures. In 
my home State of New Mexico, the Durbin amendment would protect an 
estimated 6,665 homes and almost $376 million in equity. Without 
spending a dime in Federal money, this Congress can make a significant 
contribution to stabilizing my State's housing market and keeping 
thousands of families in their homes. This is not a tough choice.
  Opponents of this provision make two related arguments. First, they 
claim a mortgage modification provision will raise the cost of home 
loans. Congress has heard testimony about this issue, and the evidence 
suggests otherwise. I will not go too deeply into this right now, but I 
encourage you to look at the testimony before the House Judiciary 
Committee of Adam Levitin of Georgetown University Law Center. 
Professor Levitin is one of a chorus of academics who has poked holes 
in the arguments against mortgage modification.
  Opponents of mortgage modification also argue that loan restructuring 
should be handled by bankers and borrowers--not judges. I could not 
agree more. Unfortunately, banks have so far been very reluctant to 
voluntarily restructure home loans despite a host of Federal 
incentives. A considerable body of evidence suggests that banks would 
actually do better if they were more willing to restructure loans. 
Foreclosure is bad for everybody, and bankruptcy is even worse.
  Congress and the President have worked hard to encourage banks to 
modify home loans. We have handed out carrots like a farmer's market, 
and yet we still have a foreclosure crisis. It is time to give the 
homeowners a stick.
  The Durbin amendment does not let every homeowner march into court 
and demand a principal reduction. Banks have the opportunity to work 
with homeowners on a reasonable compromise. As long as banks are 
willing to negotiate, they will not face a court-ordered principal 
reduction.
  All this legislation says is that banks cannot ignore their 
borrowers. They cannot stand around while working families struggle 
with unpayable loans. That sounds fair to me.

[[Page S4922]]

  The debate on this issue can get extremely complicated. But the final 
analysis is simple: The current system is unfair. It is bad for working 
families, and it is devastating for the American economy. The Durbin 
amendment is a step in the right direction. I hope you will join me in 
supporting it today.
  Thank you, Madam President. I yield the floor.
  The PRESIDING OFFICER. The Senator from Illinois.
  Mr. DURBIN. Madam President, I thank the Senators from Oregon and New 
Mexico, as well as the Senator from New York and the Senator from 
Connecticut, for speaking on behalf of my amendment.
  I would like to make a unanimous consent request that has been 
cleared by the other side: that of the 4 hours that have been set aside 
for this debate, the last 30 minutes be preserved and equally divided 
between the two sides, with 15 minutes to a side; under the custom of 
the Senate, if we go into quorum calls, time is taken equally from both 
sides. We have actively spoken on this amendment on our side, and no 
one has appeared yet, though I think they will soon, on the other side.
  So I ask unanimous consent that notwithstanding the usual tradition 
of quorum calls taking the remaining time, dividing it by half, that 
the last 30 minutes be insulated and protected from that, and it be 
allocated 15 minutes to a side.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The Senator from Connecticut.
  Mr. DODD. Madam President, let me, first of all, thank our colleague 
from Illinois for his tireless work on behalf of this idea. I joined 
him, along with Senator Schumer, early on in recommending a proposal 
like this.
  History is always a good source to go to. Back in the spring of 
1933--which is about as close an example we could probably find over 
the last 100 years that compares to the days we are in today. Of 
course, that was the height--or the beginning--of the Great Depression. 
In 1929, certainly, it all began.
  After the election of 1932--during that now often repeated ``first 
100 days'' of each administration--and that was the first 100 days ever 
talked about. It was the Roosevelt administration. The inauguration was 
in March of 1933. Inaugurations occurred in March in those days, not in 
January. So that 100 days ran from March until June. One of the first 
things the new administration did in the face of significant 
foreclosures across the country--and there were significant ones. They 
were major. Those days were, in many ways, far more difficult than the 
ones we are in.
  These are bad days, obviously, with 10,000 homes a day going into 
foreclosure, with 20,000 people a day on average losing their jobs. 
Retirement accounts are evaporating. We have all heard about, read 
about, and know people that has occurred to.
  But one of the things the new administration did in those days was to 
go out and actually purchase the home mortgages. The Federal Government 
actually did that. In order to stem the tide of foreclosures, the U.S. 
Government decided in those days that it would take over that 
responsibility. They did other things as well: put capital into banks 
to stop the runs that were occurring across the country--major steps. 
But in home foreclosures, they took the unprecedented step of trying to 
stem that tide, knowing how much damage foreclosures could cause, not 
only to families and neighborhoods and communities but also to the 
financial system.

  Senator Durbin is not advocating anything quite as revolutionary as 
the Government acquiring the mortgages of every home. While some have 
made that suggestion, he is not doing so. What he is suggesting is 
modifying the bankruptcy laws of our country for a limited amount of 
time, in a very narrow set of circumstances, to say: Where your primary 
residence is concerned--and for those who have not followed the debate, 
let me explain.
  There is no restriction in a bankruptcy court for a bankruptcy judge 
to modify--or at least to negotiate--the modification of your mortgage 
if you have a vacation home or if you have a pleasure boat and have a 
mortgage on that. The bankruptcy judge can modify the mortgage on that 
beach house, that mountain cabin, that yacht you may have. That is 
perfectly legitimate under bankruptcy laws. What you are not allowed to 
do, if you are a bankruptcy judge, is to modify the mortgage on a 
principal residence.
  I don't know if statistically what I am about to say is accurate. I 
suspect that most Americans who have a principal residence don't have 
vacation homes. I know some do, and that is perfectly legitimate. I am 
not arguing that you shouldn't have one. But explain to me, if someone 
will, the distinction on why a vacation home, a yacht, a mountain 
cabin--as nice as it is to have one--ought to be able to be subjected 
to a workout with the mortgage involved, and yet, for the person who 
only owns one home, as most do--you own one house--a bankruptcy judge 
is prohibited from engaging in a workout between the lender and the 
borrower on that principal place of residence. For the life of me, over 
the last number of months we have been involved in this debate and 
discussion, I have failed to hear an adequate explanation of why there 
is a distinction on a principal place of residence where a mortgage is 
involved and there is no hesitation, no restriction whatsoever, on 
whatever other number of homes you may have. Some have a lot more than 
two; some have three, four, and five. All of those can be subject to a 
workout, but not a principal place of residence. That is all we are 
trying to do here. Not forever, not looking back, not looking forward 
forever--Senator Durbin's amendment says for a limited amount of time, 
under limited circumstances--under the total control of the lender, by 
the way, because if you turn down a workout as a borrower, then 
basically you lose the option of working it out.
  It is so narrowly drawn under these circumstances that, for the life 
of me, I don't understand the objection. It is one of those moments 
where I try--when preparing for debate, we all ask: What is the other 
side going to argue? So I thought last night, I have to get ready for 
the other side. I tried thinking through what is the argument I would 
make if I believed this would somehow cause great harm to the economy, 
was going to flood our courts or was going to require hundreds more 
bankruptcy judges to deal with it. What is the argument I would make to 
my constituents and to the American people that we ought not allow a 
bankruptcy judge to sit down between the borrower and the lender and 
work out a financial arrangement that allows the borrower to stay in 
their home, the lender to be paid--at least getting something back--
turning that property into a foreclosed, vacant property, contaminating 
the value of every other home in that neighborhood. What is the logic? 
For the life of me, I can't come up with that, and I have tried.
  So I would urge my colleagues, as you are thinking about this and 
listening to these debates, why can't we do what the Senator from 
Illinois has suggested: For a limited amount of time, try this. It is 
not forever. It just might do what the authors have suggested, and I am 
proud to be one of them. It might just do what we failed to be able to 
achieve despite the efforts of all of my colleagues here.
  As chairman of the Banking Committee, we have come up with all sorts 
of very complicated proposals to try to assist homeowners, and I regret 
to report that while I think these ideas have great merit and we have 
all tried hard, they have not been terribly successful, despite the 
good intentions of everyone to work it out. This is the one idea we 
have not yet tried to make a difference in the foreclosure crisis.
  Before the Sun sets tonight, 10,000 families are going to potentially 
lose their homes, and that will be true tomorrow and the next day and 
the day after that. Just think about that. As we all go home tonight to 
our respective dwelling places here, 10,000 of our fellow citizens in 
this country will end up losing their homes. They have to come back and 
face their families. Imagine, if you will, if you were in that 
position, walking into that house tonight and facing your children and 
facing your family and saying: We can't make this happen financially. 
We are being pushed out of this house.
  This body cannot, for a limited amount of time, under limited 
circumstances, try something that might make a difference in that 
family's condition? I hope, in these very difficult

[[Page S4923]]

days--if almost 100 years ago, 90 years ago, another body sitting here 
in the wake of economic circumstances that were as trying as they were 
could do something as unprecedented as the Government actually 
purchasing the mortgages, can we not now ask the Federal bankruptcy 
courts to sit down and try, for a limited amount of time, to make it 
possible for that family to stay in their home?
  It may not work in every case. The Senator from Illinois has pointed 
out that of the potentially 8 million foreclosures, his bill may only 
affect 1.7 million of the 8 million, and for a lot of people, this 
won't even work, regretfully. But for 1.7 million, it might just make a 
difference to those families. The value of that--how do I put an 
economic value on that? What does it say to a family who can stay in a 
home they have bought, they watched the value decline--the mortgage 
probably exceeds the value of the home in many cases--but that sense of 
optimism and confidence, that family staying together during very 
difficult times?
  If you are the next-door neighbor, you live down the block, what 
happens to the value of your home? We know what happens. In fact, that 
very day, the value of that home that is not in foreclosure and there 
is no threat of it, but your neighbor's home now declines by as much as 
$5,000, then, of course, that property and those other properties could 
fall into a similar situation. All of a sudden, what was otherwise a 
healthy neighborhood--people meeting their obligations, equity in their 
homes--all of a sudden, you watch a neighborhood begin to decline. Just 
imagine, if you would, you are in the market to buy a home and you are 
riding down that street and you see a couple of places you might be 
interested in buying but you see foreclosure notices up on two or 
three. How willing are you going to be to buy a home in a neighborhood 
where there are foreclosures? So there is a contagion effect, a ripple 
effect, beyond just the plight of that family, which ought to be enough 
motivation to try to make a difference, but if you are not impressed by 
that, think about that neighborhood and community.
  In the city of Bridgeport, CT, in my State, there are over 5,000 
homes in that city that are subprime mortgages in danger of going to 
foreclosure--5,000 homes in 1 city. I don't need to tell anyone in this 
body what that will mean to that community. The tax base gets lost, but 
far beyond the financial implications is what it does to the heart of a 
community, what it does to the heart of a neighborhood, what it does to 
the heart of a family.
  So all we are asking for with the Durbin amendment is let's try this 
for a limited amount of time to see whether it will make a difference. 
Maybe it won't achieve the results we authors claim it will, but is it 
not worth a try to see if we can't bring that lender and that borrower 
together, to work something out so they can stay in that home? The 
lender gets paid. It seems to me that has to help.

  I agree completely with my colleague from New York, Senator Schumer, 
who made the case, and did so simply. There is a direct connection 
here. If we are unable to get our housing situation stabilized, all of 
these other efforts we are making to get the financial system working 
are not going to succeed. At the root cause of this issue is the 
residential mortgage market. The failure of us to reach that bottom--to 
begin to see these values improve and people out purchasing homes will 
also be not only indicative of the direction we are heading in but also 
essential if we are going to recover.
  Beyond the issue of housing and what happens to families, the very 
heart of the economic crisis, its roots, began in the housing market. I 
believe very strongly, as others do who are far more knowledgeable 
about macroeconomics than I will ever be, that our inability or 
unwillingness or failure to address the residential mortgage market 
will make it almost impossible for us to get the kind of recovery we 
are all seeking on the larger economic issues.
  So I wish to commend my colleague from Illinois. He has worked 
tirelessly. He has brought together the financial institutions. I know 
many of them mean the very best. There is no ill will involved in this, 
I presume. I think there is a culture that goes back a long time which 
says that if a house is in foreclosure or about to go into it, get the 
family out, put it on the market, sell it to someone else, because the 
likelihood of that family redefaulting is pretty high. That may be true 
statistically, but it seems to me that in these circumstances, we are 
dealing with something very different, far more pernicious, far more 
widespread, with far greater implications. So even the best argument 
one might make that historically you do better in getting an economy 
back on its feet by allowing these properties to go into foreclosure, I 
think all of us recognize, with the numbers we are talking about here, 
that accepting that kind of conclusion could be disastrous, as it has 
proven to be.
  I recall January and February of 2007. I became chairman of the 
Banking Committee for the first time in January of 2007. We had a 
couple of hearings on currency manipulation, I believe it was, in those 
days in January, but the first hearings I held in February of 2007 were 
on this issue. In the 110th Congress, I think we had 80, 82 hearings, 
and a third and a half were on this subject matter as we tried over and 
over again to get the industry to step up, to come up with various 
ideas that would mitigate the foreclosure problem.
  I recall at the very first hearing we had a witness who was very 
knowledgeable about housing issues, and he testified that he thought 
there might be somewhere between 1.5 million and 2 million 
foreclosures. He was sort of ridiculed because these numbers were 
hyperbolic; this was an exaggeration of what would happen. In fact, the 
critics were correct. It was. He was wrong. It wasn't 1.5 million or 2 
million; it has now become 8 million. So those dire predictions in 
February 2007 have proven to be painfully off the mark because, in 
fact, the problem is a lot worse.
  I believe very strongly that had we in 2007 been able to convince the 
previous administration to step up and engage this issue in 2007, and 
even a good part of 2008, we could have avoided what we went through 
last fall and are going through today as we try to get this economy 
back on its feet again. But there was tremendous resistance to doing 
anything despite countless meetings we had, including with the 
financial institutions, where commitments were made in March and April 
of 2007 to actually sit down and engage in a workout with borrowers and 
lenders. None of that ever really happened at all. The numbers are 
embarrassingly small where workouts occurred, despite the efforts to 
achieve this without going through a legislative proposal.
  Of course, the idea of modifying the bankruptcy laws was one that 
Senator Durbin raised early on. We were unable to get it done. Today, 
we are trying one more time, in a far more constricted and narrow 
construct of this proposal, over a limited period of time, to affect as 
many people as possible.
  This amendment would also preserve some $800 billion in home equity 
for neighbors, we are projecting. The list I have of just the 
properties that could be affected--in my own State, some 15,000 homes 
could be saved by the Durbin amendment. Looking down the list, the 
numbers are stunning. In California, I think the numbers I saw are 
385,000 homes could be saved by the Durbin amendment. I see my friend 
from New Mexico is here, and there we are talking about over 6,000 
homes would be affected in New Mexico. In the State of Oregon, it is 
like Connecticut. Over 15,000 homes would be affected, I say to my 
colleague from Oregon. In North Carolina, I am looking at 38,000 homes, 
it is projected, could actually be saved from foreclosure, the State of 
the Presiding Officer.
  Madam President, I ask unanimous consent that this list be printed in 
the Record so Members can actually look down and see what a difference 
this amendment could make in their State.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                 Helping Families Save Their Homes Act


                 durbin amendment state-by-state impact

       By creating stronger incentives for the creation of 
     voluntary mortgage modifications, the Durbin amendment to the 
     Helping Families Save Their Homes Act would prevent 1.7 
     million mortgages from falling into foreclosure and would 
     preserve over $300 billion in home equity for neighboring 
     homeowners who have made each of their own mortgage

[[Page S4924]]

     payments on time (according to estimates from Moody's 
     Economy.com and the Center for Responsible Lending). Based on 
     that estimate and the relative impact of the foreclosure 
     crisis throughout the country, below are state-by-state 
     estimates regarding how many families would save their homes 
     under the Durbin amendment and how much equity would be 
     preserved by neighboring homeowners.

------------------------------------------------------------------------
                                                     Home equity savings
             State               Homes saved by the    for neighbors of
                                  Durbin amendment       saved homes
------------------------------------------------------------------------
Alabama.......................               14,480         $287,273,000
Alaska........................                1,447           74,905,000
Arkansas......................                7,297           85,016,000
Arizona.......................               63,415        6,732,666,000
California....................              385,039      121,033,183,000
Colorado......................               23,373        1,589,310,000
Connecticut...................               15,461        1,762,362,000
District of Columbia..........                2,726        2,822,811,000
Delaware......................                4,282          311,407,000
Florida.......................              206,361       36,772,700,000
Georgia.......................               59,197        1,247,655,000
Hawaii........................                7,293        3,655,706,000
Iowa..........................                8,089          259,474,000
Idaho.........................                7,342          238,286,000
Illinois......................               60,594       19,420,658,000
Indiana.......................               27,960          589,237,000
Kansas........................                6,220          179,676,000
Kentucky......................               11,750          292,303,000
Louisiana.....................               12,651          496,045,000
Massachusetts.................               37,330        9,264,833,000
Maryland......................               48,909       11,173,429,000
Maine.........................                4,878          104,414,000
Michigan......................               52,884        2,581,196,000
Minnesota.....................               25,001        1,515,320,000
Missouri......................               22,519          993,960,000
Mississippi...................                9,042           90,575,000
Montana.......................                2,815           38,149,000
North Carolina................               38,667          645,572,000
North Dakota..................                  711           33,523,000
Nebraska......................                3,763          136,772,000
New Hampshire.................                5,812          169,863,000
New Jersey....................               44,585       15,149,105,000
New Mexico....................                6,411          375,826,000
Nevada........................               38,243        4,979,857,000
New York......................               70,808       37,296,477,000
Ohio..........................               43,985        1,528,772,000
Oklahoma......................                9,322          210,114,000
Oregon........................               15,261        1,491,292,000
Pennsylvania..................               37,169        3,325,687,000
Puerto Rico...................               10,063                  n/a
Rhode Island..................                6,665        1,482,129,000
South Carolina................               17,011          298,754,000
South Dakota..................                1,504           30,513,000
Tennessee.....................               25,208          564,744,000
Texas.........................               82,302        2,798,084,000
Utah..........................               10,988          685,958,000
Virginia......................               44,035        5,210,416,000
Vermont.......................                1,466           15,138,000
Washington....................               27,176        3,397,336,000
Wisconsin.....................               15,620        1,189,240,000
West Virginia.................                4,376           53,792,000
Wyoming.......................                  805           17,344,000
                               -----------------------------------------
      United States...........            1,690,308      304,697,753,000
------------------------------------------------------------------------


  Mr. DODD. I thank the Chair.
  Again, I can't speak with absolute certainty. Maybe the numbers are a 
bit lower or higher. What if in my State it wasn't 15,000; what if it 
was 10,000? Frankly, 10,000 homes would be a lot, a lot of families in 
a lot of neighborhoods in an economy that would be vastly improved if 
10,000 homes in my State could be saved from the terrible conclusion of 
foreclosure.
  So we will consider this amendment in a couple of hours. We will vote 
up or down on it. Then we will go about our business on the housing 
bill that is before us. But as Senators think about how they are going 
to vote on this matter in a couple of hours, think about what it would 
mean tonight at 6 or 7 o'clock when another 10,000 of our fellow 
citizens find themselves in the serious condition of losing their 
homes.
  What do you say to your children, your family, what it does to your 
neighborhood. Can we not take a chance and try an idea that colleagues 
have worked on for weeks now, not overnight--this is not a quickly 
drawn amendment; it does not consider the concerns of the lenders in 
the country--to bring this together and give this an effort, as we did 
last summer with the HOPE for Homeowners and last spring as well.
  I urge my colleagues to give this an opportunity to work. In my 
office, we get about 30 or 40 letters every day from constituents 
waiting to know whether they can keep their homes. I suspect I am not 
terribly different in that regard from my colleagues--or the e-mails 
that arrive in our office in Hartford on a daily basis. In many cases, 
the answer is--and we hear this over and over. Ed Mann has been with me 
30 years. Ed Mann does not engage in hyperbole. He is a quiet, serious 
man. What he hears day after day in our office is: I have tried to 
reach my lender. I have called and called and I can't get hold of 
anyone. Can I get any help? That is repeated over and over.
  I say this respectfully, but I believe in this proposal, which I 
think will cause lenders and borrowers to get together to try and work 
these matters out, the lender controls everything under the Durbin 
amendment. They have total control of the process. It is not in the 
hands of the borrower; it is in the hands of the lender and, obviously, 
the proposal of a bankruptcy judge being able to engage.
  I met with my Federal judges--district court judges, appeals and 
bankruptcy court judges. To a person, every one of them said: You ought 
to pass this.
  These are people who work on this every day. These are serious 
appointees in the Bush administration, as well as the Clinton 
administration. Some go back further, in fact, to the Reagan 
administration. To a person, all of them said: Get this done. This 
makes sense. These are bankruptcy judges. They are not frightened of 
the caseload. They are not afraid of trying to bring people together to 
save home ownership. Our bankruptcy judges believe this is right.
  The civil rights groups of this country believe this is right. A long 
list of people worked on this. But our principal debt of gratitude goes 
to the Senator from Illinois who has been tirelessly championing this 
concept and idea. Senator Schumer has worked very hard as well on this 
issue.
  My hope is, in the next couple of hours, we might surprise the 
country and actually do something to keep people in their homes. What a 
great message tonight that would be, instead of walking through the 
door saying: I think we lost our home, saying: There is a chance we can 
keep our home, keep our family together, weather this storm, and come 
out of it stronger and better because the Government is not going to 
just sit back and allow nature to take its course and subject me and my 
family and my neighborhood to the vagaries of the foreclosure process. 
People are on my side fighting for me. We can do that today in a 
united, bipartisan fashion by allowing this simple idea to have a 
chance to succeed.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Arizona.
  Mr. KYL. Madam President, Senator Durbin's amendment would allow 
bankruptcy judges to modify home mortgages in bankruptcy court by 
lowering the principal and interest rate on the loan or extending the 
term of the loan. The concept in the trade is known as cram-down. It 
would apply, in his amendment, to all borrowers who are 60 days or more 
delinquent on payments for loans that originated before January 1, 
2009, and would set the maximum value of loans that qualify at 
$729,000. It is broader than the bill that was tabled in the Senate 
several months ago.
  Senator Durbin sincerely believes his amendment would help save 
homeowners who are at risk of losing their homes in foreclosure, and I 
respect that. But many experts believe the cram-down provision would 
have pernicious, unintended consequences on the mortgage market.
  First, it would result in higher interest rates for all home 
mortgages, exactly what we do not want while we are trying to entice 
people back into the market. Interest rates on home loans are 
substantially lower now than other types of consumer loans because of 
the guarantees current law provides to lenders. If all else fails, the 
lender always has the right to take back the house for which it lent 
the money. If we eliminate this security for lenders and increase the 
risk inherent in making a home loan, then lenders will have to charge 
higher rates on interest for home loans to cover the risk. The net 
result of the amendment, in other words, will be higher interest rates 
for home loans and fewer Americans who will be able to afford to buy a 
house--not what we need to end the housing crisis.
  While attempting to solve a specific problem for a particular group 
of people, we could end up exacerbating this situation for all the 
people who would want to refinance or to take out loans in the future.
  As I said, experts agree and studies show cram-down will result in 
higher interest rates. That is why it is opposed by virtually all in 
the industry.
  The Congressional Budget Office warned in January 2008 that cram-down 
could result in ``higher mortgage interest rates'' because lenders are 
forced to compensate for potential losses that will be levied upon them 
in bankruptcy court.
  In hearings some years ago before the Senate Finance Committee, in 
1999, Senator Grassley asked Lawrence Summers, who now serves as 
President Obama's head of the National Economic Council, if `` . . . 
debt discharged in bankruptcy results in higher prices for goods and 
services as businesses have to offset the losses?'' Mr. Summers 
responded as follows:

       The answer is--it's a complicated question, but certainly 
     there's a strong tendency in

[[Page S4925]]

     that direction and also towards higher interest rates for 
     other borrowers who are going to pay back their debts.

  In November 1986, Congress implemented a mortgage cram-down provision 
for family farmers under chapter 12 of the Bankruptcy Act--obviously, 
the same well-intended purpose here. According to a 1997 study, farmers 
faced a 25- to 100-basis point increase in the cost of farm real estate 
loans, as well as increased difficulty in obtaining financing as a 
result of the cram-down application. The current median value of a new 
home in the United States is $206,000. A 25- to 100-basis point 
increase for the $206,000 would increase the cost of the mortgage by 
over $47,000.
  We are talking about substantial impacts as a result of this well-
meaning provision that would, in fact, over the entire market be very 
bad.
  Proponents of the bill argue it should be allowed because, after all, 
bankruptcy law already allows a version of this for vacation homes. Big 
difference. What proponents do not mention is that to qualify for cram-
down on a vacation home mortgage, the debtor is required to pay off the 
entire amount of the secured claim within the 5-year length of the 
chapter 13 plan. The Durbin amendment, of course, does not include the 
requirement that the debtor must pay off the security claim within 5 
years. He does not purport to treat cram-down on primary homes the same 
way the Bankruptcy Code treats them on secondary homes.
  There is a third point with respect to this particular amendment. As 
I said, it is different from what we tabled before. It is a much 
broader amendment. It is not the sort of narrow, targeted approach to 
the problem some people like to characterize it as.
  Unlike prior proposals, this bill is not limited to the high-risk or 
subprime loans or other nontraditional loans but allows cram-down for 
all loans. Let me repeat that. Unlike what we dealt with before in 
prior proposals, this cram-down amendment is not limited to high-risk 
or subprime loans or other nontraditional loans. It would allow cram-
down for all loans. The only limitation, as I said, is that the loan 
had to originate before January 1, 2009, and the maximum amount--not 
much of a limitation--is $729,000, and the borrowers would have had to 
apply for relief under the Loan Modification Program. Other than that, 
there is no limitation, and as I said, it would apply to any kind of 
mortgage. This would, obviously, allow millions of borrowers to enter 
into bankruptcy and simply walk away from the debt owed on their homes.

  I don't take this position lightly because my State is arguably the 
hardest, certainly one of the hardest hit by the foreclosure crisis. 
People in my State face this every day. I wish to help Arizonans stay 
in their homes. Every time I go home, which is virtually every weekend, 
I talk with people who are, in one way or another, related to the 
problem because so much of the business in Arizona has to do with home 
building and development and construction. So many people have had 
problems with their mortgages. As I said, many are being foreclosed. 
All the others, the foreclosures, of course, represent a relatively 
small percentage of the total of 100 percent of loans. Most of the 
people I talked with are upset because the value of their homes has 
declined so much, among other things, because of their homes being 
foreclosed upon. They wonder: When is the market going to hit bottom; 
when am I going to be able to sell my home for something similar to the 
equity I have in it.
  Values from assessors have shown that values have decreased by some 
50 percent in amount. It is in our best interest to see this mortgage 
market bounce back, to see people be able to buy homes again and, 
frankly, to sell homes at somewhere near a realistic price related to 
their real value. This is a good time to enter into the home market if 
you have the money to do it because prices are so low and interests are 
so low. But the problem with this bill is it will make the interest 
rates higher and, therefore, will make it more difficult for people to 
afford to get into a home, the net result being the recovery will be 
extended far beyond what it otherwise would be under normal 
circumstances.
  In my home State of Arizona, people are wondering: Will it be 6 
months, 1 year, 18 months? I guarantee whatever that amount is, it will 
be longer if this bill passes. It will be longer because interest rates 
will increase, people will not be able to sell their homes and, 
therefore, we will continue to have the problem we currently have.
  There are other programs available. I mentioned one. There is the 
HOPE NOW Program, the HOPE for Homeowners Program, and the President's 
new $75 billion program that helps borrowers who are facing foreclosure 
to modify their loans and allow the so-called underwater borrowers to 
refinance into lower rate mortgages. These are the people whose home 
value is less than the amount owed on their mortgage.
  There are programs available. All of us are talking to banks about 
working out loans with the people who face foreclosure. But a solution 
that may be well meaning but would have the unintended consequences 
this particular amendment has is not the answer. We should not simply 
grab onto something because it promises to provide some relief to some 
people, when the reality is that I think all the experts agree the 
interest rates would be increased, making it much more difficult for 
the 95 percent or so--I am not sure of the exact percentage--of the 
other people who would like to see this home mortgage crisis come to an 
end.
  Bottom line: cram-down will not fix the recent downturn in the 
housing market but only prolong the recovery by increasing interest 
rates. Instead of encouraging homeowners at risk of foreclosure to file 
for bankruptcy, the Federal Government should continue to encourage 
lenders to work with owners to modify loans where it is economically 
viable for homeowners to remain in their homes. Obviously, not all 
homeowners are going to be eligible for loan modification. But the 
answer is not to incentivize bankruptcy by making it as the only means 
to save one's home.
  I hope that when it comes time to vote against the Durbin amendment, 
we will recognize we have already tabled an amendment which was much 
more narrowly written and that this is an amendment which deserves to 
be defeated.
  I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. WHITEHOUSE. Madam President, I ask unanimous consent that the 
order for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. WHITEHOUSE. Madam President, we face a grave economic crisis, and 
it is our responsibility, our duty as representatives of the American 
people, to give them every tool they need to weather this economic 
storm.
  There is much we have already done to help. Working with President 
Obama, we cut taxes for middle-class families--because in times like 
this, every little bit helps. We gave an extra $250 payment to seniors 
on Social Security and disabled veterans to help them make ends meet 
when their household budgets are stretched to the breaking point. 
Preserving jobs means preserving our families' livelihoods, so we are 
investing billions of dollars in new infrastructure to create and 
support jobs all across America.
  Today, Madam President, we want to take on one piece of America's 
unfinished economic business. Many families in this country--too many--
have found that making ends meet is impossible, and they are in the 
process of filing for bankruptcy. Four years ago, when Congress 
overhauled the Bankruptcy Code, our Republican colleagues suggested 
that those who file for bankruptcy had carelessly lived beyond their 
means and were trying to game the system--at best, irresponsible; at 
worst, engaged in fraud. But in the years since, we have seen that was 
not true.
  Families don't enter bankruptcy casually to save a few dollars. 
Bankruptcy is a last resort for individuals and families on the brink 
of financial collapse. The vast majority of those who seek bankruptcy 
are struggling, working families. With the economy in its weakest 
condition in decades, bankruptcy filings are soaring. Tragically, the 
most common reason for bankruptcy has been health care costs--

[[Page S4926]]

compounding the heartbreak of illness or injury with the strain of 
financial distress--but a lost job or ruined pension can be just as 
devastating. And many families file for bankruptcy because the 
mortgages on their homes have gone through the roof and they simply 
can't afford them any longer.
  Too many homeowners were coaxed into bad mortgages--with the promise 
that values would keep going up and up and up--in many cases, without 
even understanding the hazards built into the small print of the 
mortgages they assumed. Well, the bubble has burst, and now these 
homeowners are stuck with mortgages that are larger than the home 
itself is worth.
  Ordinarily in a bankruptcy, judges can modify the terms of debts or 
obligations, including loans on vacation homes and on family farms. 
These modifications help prevent foreclosure and permit people to keep 
making payments on their reset loans. That is good because when a house 
is foreclosed, neighboring property values decline, tax collections 
decrease, and schools and communities suffer. Helping prevent 
foreclosures, as this amendment would do, will help rescue falling home 
prices and get the housing market back on track--and that will help all 
homeowners, not just those who are facing bankruptcy.
  Under current law, Americans looking to bankruptcy to escape 
unbearable financial strains cannot modify the terms of the very 
contract most dear to any family facing bankruptcy--their principal 
residence, the place they call home, where they raise their children, 
where they know their neighbors, where they live their lives. They can 
face foreclosure, even homelessness. The neighborhood erodes, and a 
cascade of dire consequences ensues.
  To remedy this, the distinguished Assistant Majority Leader, Senator 
Durbin of Illinois, has offered an amendment that would temporarily, 
and with conditions, give primary residence mortgages the same 
treatment in bankruptcy as other types of secured debts. Like any 
secured creditor, the mortgage holder would be entitled to adequate 
protection of his or her property interest during the bankruptcy. The 
modification of the mortgage would be limited to a market rate and a 
term of no longer than 30 years.
  Given the cost of foreclosures, which average $60,000 per incidence--
setting aside the harm to the family of losing their home, or the 
neighborhood of having another shuttered, plywood-covered building on 
the block--it would seem that this amendment to the code would 
ultimately benefit all of the parties to the mortgage. But on this 
question, the big banks seem to be inured to suffering and deaf to 
common sense.
  Despite requirements protecting banks that families give their lender 
45 days' notice before filing for bankruptcy--that allow lenders to 
prevent forced modifications if they offer voluntary modifications as 
part of President Obama's Housing Affordability and Stability Plan; 
that sunsets the program at the end of 2012--the big banks are still 
opposed. They gorge on taxpayer funds and support, but they will not 
help these customers.
  I would note this is not a problem with the small banks, the 
community banks that held their loans and work with their distressed 
customers in their community every day. This is a problem with the big 
banks that sold families' mortgages off in strips to investors far 
away, leaving the homeowner no one to talk to, no one who can make a 
decision about modifying the mortgage.
  What is the homeowner supposed to do? Call an investor in 
Switzerland, in Japan? Ring up the hedge fund in New York that owns a 
strip of their mortgage and get them to all come together and agree on 
a workout? It is impossible.
  When we allowed mortgage securitization, we created this hole, and we 
are obliged to fill it. Only a judge can cut through the nightmare of 
bureaucracy that a homeowner faces trying to sort through this mess. 
Securitized mortgages caused it, and there is only one practical way to 
clear it up, and that is the Durbin amendment.
  I am very proud to have cosponsored this amendment, as well as the 
Helping Families Save their Homes in Bankruptcy Act, the bill on which 
this amendment is based. I thank my colleague from Illinois for his 
passionate and tireless work on this legislation. I share his belief 
that this is the most direct and effective way to mitigate the 
foreclosure crisis.
  I also share Senator Durbin's frustration that although he and 
others--Senator Schumer in particular--have worked tirelessly to 
negotiate in the interest of all parties, this powerful banking lobby 
has been greedy, stubborn, and unreasonable. It refuses to recognize 
the human problem that poor homeowners have when they have to try to 
reassemble a mortgage that got sold in strips around the world and try 
to get those people together to reach an agreement. It is asking 
ridiculous things of that family to expect them to handle that problem, 
and they have no other mechanism, except a court, which can settle it 
once, and quickly, for all.
  I have been here only a short time, Madam President, but this is one 
of the most extreme examples I have seen of a special interest wielding 
its power for the special interest of a few against the general benefit 
of millions of homeowners and thousands of communities now being 
devastated by foreclosure.
  Bear in mind that the big banks opposing this legislation can reset 
their own obligations in a receivership or bankruptcy, but what's fine 
for them is obviously too good for their long-suffering customers, 
who--uniquely--don't get the same rights for their home mortgage.
  The scale of this is immense. Senator Durbin's commonsense measure 
would help as many as 1.7 million American families stay in their homes 
and preserve $300 billion--nearly one-third of a trillion dollars--in 
home equity for the neighboring homeowners whose home values get 
knocked down when a bank will not negotiate with an owner and comes in 
and forecloses, hammers up the plywood over the windows, lets the lawn 
grow out, and often lets the property be looted. In my home State of 
Rhode Island alone, 6,600 homes and over $1.4 billion in home equity 
could be preserved.
  Homeowners are up against an impossible situation. It was one that 
was created by the big banks and the investment world when they 
securitized these mortgages and spread them to the four winds. This is 
their only hope to redeem it, their only hope to have somebody sensible 
to talk to, and I urge my colleagues to support this amendment.
  I thank the Chair, I yield the floor, and I suggest the absence of a 
quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. CARPER. Mr. President, I ask unanimous consent the order for the 
quorum call be rescinded.
  The PRESIDING OFFICER (Mr. Udall of New Mexico). Without objection, 
it is so ordered.
  Mr. CARPER. Mr. President, I rise with some reluctance today to 
oppose the amendment before us. The amendment is being offered to what 
I think is a very good bill. The provisions of the underlying bill are 
worthy of our full support. The notion that we are going to expand the 
ability of FHA and Rural Housing to modify loans is something I 
certainly support and I believe others should. The idea in the 
underlying legislation is that we should expand access to the HOPE for 
Homeowners Program, we should provide a safe harbor for servicers who 
otherwise would modify a loan. We have a situation, as the President 
may know, where we tried to encourage the modification of loans to help 
people who are in a bind to avoid foreclosure. We find out that among 
the parties who have to agree to the loan modification are the 
servicers, the people to whom we send mortgage payments. They have not 
been anxious to participate in modifying the mortgages because, first, 
they get no financial incentive upfront for doing the work and, second, 
if they do the work to modify the mortgage, they end up being sued by 
the investors who own these mortgage-backed securities around the 
world. That is not much incentive and, as a result, servicers have not 
done the work they need to do to help modifications take place.
  Mr. President, I ask unanimous consent that my time count against the 
Republican time. I understand it has been cleared with our Republican 
friends.

[[Page S4927]]

  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. CARPER. In any event, the underlying legislation addresses in a 
very satisfactory way an approach so that servicers will be more likely 
to participate in mortgage modifications.
  Finally, the underlying legislation creates more enforcement tools 
for FHA to use to go after bad actors, bad lenders. That is all good 
stuff and we ought to support it, and I certainly do.
  I am sorry to say I cannot support in its current form the so-called 
bankruptcy cram-down legislation offered by our friend from Illinois. A 
year or so ago we visited this issue. We had a vote on the floor about 
whether to bring a provision similar to this to the floor for debate. I 
did not vote to bring it to the floor for debate at that time. I was 
not sure if the issue was ripe and I didn't know that we were ready to 
do it.
  My view has changed. I think it is an appropriate time and place for 
us to negotiate--to debate the issue of cram-down. I think it is 
unfortunate that we cannot offer an amendment, a second-degree 
amendment or perfecting amendments to the provision that has come to 
the floor. I understand things have been worked out by others here, 
maybe in our leadership, to bring the amendment to the floor without 
the opportunity to perfect it further. I think that is unfortunate, but 
it is what it is.
  About a month or two ago I hosted, back in Delaware, a forum that was 
designed to introduce to the people of my State the most recent 
initiatives launched by the Obama administration to encourage the 
modification of home mortgages, to help people who are in danger of 
becoming in default and facing foreclosure of their homes. The 
administration has given us a couple of very good proposals. I think 
our earlier HOPE for Homeowners proposal that we adopted when I served 
on the Banking Committee last year was a very good proposal, but the 
problem was we couldn't get the servicers to cooperate and be part of 
it. I think we figured that out in the underlying bill today.
  When I hosted my forum back in Delaware earlier this year, some of 
the participants were fearful of losing their homes, some were 
approaching foreclosure. They wanted to learn more about foreclosure. 
We had housing counselors there. It was a helpful forum for a lot of 
people.
  One of the things I learned there was from one of the people who 
participated, a woman who is a bankruptcy lawyer. She came up to me and 
she said: You know, we are having a hard time in some cases getting 
financial institutions, the lenders, to take seriously the opportunity 
to modify mortgages. She said: I think they would take that opportunity 
more seriously if they knew at the end of the day, if they were not 
serious, they would face in a bankruptcy court the possibility that a 
bankruptcy judge will come in, lower interest rates, reduce principal 
and stretch out the time for repayment of these mortgages.
  I thought she made a compelling case. I since then decided that maybe 
this is an issue we ought to bring to the floor. It does have value. 
This is the appropriate time. A lot of people are facing foreclosure, a 
lot of people are in foreclosures, and this could be a tool--not 
something that would be a first choice but maybe a last option. It 
could be the last option after whoever is the homeowner facing 
difficulty had gone through all the programs that are offered by the 
new administration and would then take advantage of whatever programs 
are offered by lenders--Countrywide and others.
  The legislation before us today is an improvement over some earlier 
versions. There are a couple of problems I have with it. I want to 
mention those, if I could. One of the problems occurs when you have a 
situation where a person has asked a lender to modify a mortgage and 
the lender has agreed to do that and then in the next year or two the 
homeowner, who has actually gotten out of bankruptcy a better deal, 
turns around and sells their home at a profit. I believe the lender, 
having gone through the bankruptcy and the mark-down, if you will--that 
lender should be able to participate more fully than is envisioned in 
this underlying bill.
  The House takes it a little differently. This amendment says the 
lender would appreciate, I think, maybe to the tune of 50 percent, 50-
50 with respect to an appreciation in value following the bankruptcy. 
In the House they have a different approach. The first year the lender 
would get 90 percent of any appreciation, the second year 70 percent, 
third year 50 percent, and eventually phase out. I think that is a 
better approach.
  I would like to have seen and encouraged that we consider more 
tightly constraining the period of years that would be covered; that 
is, from which mortgages would have been originated the number of years 
that might fall into this approach.
  In the legislation before us, you can go all of the way back in time, 
whenever. There is no beginning date. The ending date is January of 
this year. And I think, whether it would happen to be a subprime 
mortgage, an Alt-A, almost any kind of mortgage would still be able to 
participate in a bankruptcy. That is a bit broad. At the very least, I 
would hope we would be able to come up with something that would say, 
we would end the period of eligibility maybe from 2002, 2003, to the 
end of 2007. That seems reasonable to me. We do not have that kind of 
constraint in this amendment.
  If we could have fixed that provision, maybe moved the eligibility 
back from January 1 of this year to January 1 of a year ago, that would 
have certainly helped make it easier for me to support the amendment. 
The idea of giving the lender a better opportunity to participate in 
appreciation of the home that later on comes out of bankruptcy, a 
person comes out of bankruptcy and sells their home for a profit, I 
think the lender ought to be able to participate more fully than is 
envisioned here in this amendment.
  I think it is unfortunate that we do not have a chance to perfect it 
further. I do not know that we will see this issue again. My hope is 
what the administration--the programs the administration has launched 
will have great effect, a lot of people will take advantage of them, 
that the mortgage modifications of the individual companies, the 
individual lenders will be more effective and be better utilized.
  I hope the fixes we are providing for the HOPE for Homeowners 
Program, addressing some of the problems I have mentioned, I hope that 
helps too. If it does not, and we realize later on that there still 
needs to be this threat of a bankruptcy cram down at the end of the 
day, then let's revisit this issue. But I hope those of us who have 
maybe somewhat different views will have them be debated on the floor, 
and have an opportunity, if we are not fully comfortable with what 
comes to the floor, have an opportunity to amend and hopefully perfect 
it and make it better.
  I am going to have to reluctantly oppose the amendment. I appreciate 
our friends from the other side yielding time on this issue for me.
  I yield back.
  The PRESIDING OFFICER. The Senator from Tennessee is recognized.
  Mr. ALEXANDER. Mr. President, I ask unanimous consent to speak as in 
morning business for up to 15 minutes.
  The PRESIDING OFFICER. Without objection, it is so ordered.


                            Education Policy

  Mr. ALEXANDER. Mr. President, I wish to make a few remarks about 
education, a subject that is important to virtually all of us.
  When figuring out what to do about education, my suggestion to those 
in my party is that Republicans should ask, ``What would Lincoln do?''
  During the first 16 months of his Presidency, Abraham Lincoln helped 
enact three of the most important and successful pieces of legislation 
in American history: the Homestead Act, the Morrill Acts that created 
the land-grant colleges and universities, and the Pacific Railroad Act.
  What made these laws successful, according to Harvard Professor Bill 
Stuntz, in an April 6 article in The Weekly Standard, was that they 
``did not depend on the complex judgments made by members of congress 
or government regulators. [They] were meant to confer opportunities, 
not to solve problems . . . the necessary elbow grease was supplied by 
the private citizens whose prospects Lincoln improved.''

[[Page S4928]]

  These three laws helped American farmers create the world's most 
productive farmland and American universities produce the most educated 
workforce. The transcontinental railroad knitted together this 
sprawling Nation.
  A later version of this same thinking produced the GI bill 
scholarships which followed veterans to the colleges of their choice at 
the end of World War II. Then came Pell grants and student loans which 
today follow two out of three students to the colleges of their choice.
  Similarly $31 billion of Federal research money is handed out each 
year to universities. Almost all of it is peer reviewed and 
competitively granted, and not parceled out by legislators and 
regulators. All of this might be called the Lincoln approach to Federal 
Government involvement in education. Conferring opportunities.
  Now, compare it to the command-and-control Rooseveltian model best 
exemplified by our kindergarten through the 12th grade system of 
education. In that system, students do not choose--they are told--where 
to go to school. Government money goes directly to institutions, not to 
students. Government and unions write rules handcuffing teachers and 
principals and other student leaders. And virtually no teacher is paid 
more for teaching well.
  There is yet another approach. No Federal involvement at all. Some 
believe that. Leave education to the States or communities.
  I suppose that over the last 30 years I have embraced all three of 
these points of view. Some may call that unprincipled, but I prefer to 
align myself with former Senator Everett Dirksen, who once said: ``I am 
a principled man, and flexibility is one of my principles.''
  During my second year as Governor in 1980, I asked President Reagan 
to support what I called a grand swap, give the States all of 
kindergarten through the 12th grade, and the Federal Government would 
take all of Medicaid.
  The President liked that. I liked it. But it did not go very far.
  In 1984, I helped make Tennessee the first State to pay teachers more 
for teaching well. I encouraged school choice and created centers and 
chairs of excellence at universities. Despite this aggressive State 
action, I concluded at the end of my 8 years as Governor that K-12 
education depended entirely upon parents, teachers, school leaders, and 
community. So I traveled to all 132 school districts in Tennessee, 
creating Better Schools Task Forces, and challenging them to create 
better schools.
  As Education Secretary, I proposed America 2000, again emphasizing 
community responsibility for education, higher standards for States, 
and support for what we called then ``break the mold'' charter schools, 
and more choices for parents of low-income children.
  Later on, I said we can do without a Department of Education--the 
Department I used to head--meaning that I thought an agency handing out 
scholarships to K-12 students, as well as college students, plus some 
effective advocacy was all we needed at the Federal level.
  As a Senator, I reluctantly embraced No Child Left Behind, because it 
forces reporting on children who are indeed left behind, but have 
introduced legislation to empower States to try to do that reporting in 
their own way.
  Putting it all together, I may not have been quite as inconsistent as 
I have accused myself of being.
  No. 1, I believe the Federal Government should be involved in 
education, but I am for the Lincoln empowering model as opposed to the 
Rooseveltian command-and-control model.
  No. 2, I believe that 95 percent of making K-12 education better 
depends on parents and teachers and school leaders. And, finally, while 
I believe it is virtually impossible for regulators and politicians in 
Washington to make schools better, I believe it is sometimes possible 
for Washington to help parents, teachers, school leaders, and 
communities make schools better.
  So following that Lincolnian set of principles--conferring 
opportunities instead of making decisions--what exactly should the 
Federal Government do to empower parents and help them be better 
parents?
  One, a Pell grant for kids. Give every middle- and low-income child 
$500 to spend after school at any State-approved education program. 
This would help fund music and art lessons, English lessons, other 
catchup and get-ahead lessons. It would pour billions into poorer 
school districts, programs encouraging public schools in those 
districts to get busy and attract students by offering the afterschool 
programs themselves.
  A second thing would be a Federal tax system favoring parents with 
children. We had this during the 1950s in America. President George W. 
Bush did more to support this idea than most realize.
  Next, perinatal care. Make sure that pregnant mothers receive care 
and find a medical home, a team of medical professionals that is 
responsible for coordinating all of the new baby's health care needs 
from before the pregnancy until 6 weeks after. That would be the real 
Head Start.
  Nurses in homes. We could encourage nurses to visit homes to make 
sure every newly born child has a medical home. Remember, now, I am 
taking about what could the Federal Government be doing to help parents 
be better parents.

  Home schooling. Our policy should be never to hinder home schooling, 
and to look for ways to help. Why should we punish parents who are 
doing their job well?
  Professor Coleman at the University of Chicago used to say: School is 
for the purpose of helping parents do what the parents do not do as 
well.
  We could help adults learn English. There are lines of new Americans 
outside federally funded programs in Tennessee to help adults learn 
English. Senator Kennedy has told me the same is true in Massachusetts. 
Encouraging our common language is a Federal role, and if parents speak 
English better, the child is more likely to speak English better.
  Finally in this list of ideas: worksite day care. With so many 
parents working outside the home, there is less time for the child. One 
solution is worksite day care near the place where the parent works. 
Take the child to work. This is usually a private sector solution, but 
as assistance for low-income parents could make sense.
  To help teachers and school leaders be better, what could the Federal 
Government do? One thing would be to help fund higher standards and 
data collection. Those should be set by States or groups of States, not 
by those of us in Congress. But they should be set so teachers, 
parents, and students know what to expect.
  Probably nothing is more important than paying good teachers more for 
teaching well. I especially admire the work the new Secretary of 
Education has done in this area in Chicago. I know the new Senator from 
Colorado and the Senator from Tennessee, Mr. Corker, in their hometowns 
have done this.
  Every child benefits from exceptional teaching. Now that we know how 
to relate student achievement to the skills of the teacher or the 
groups of teachers, we should pay teachers for their superior skills. 
That means expanding the Teacher's Incentive Fund, which already 
exists, to help local school districts reward outstanding teaching in 
many different ways.
  As the late Albert Shanker, president of the large American 
Federation for Teachers, used to say, ``If you can have master 
plumbers, why not master teachers?''
  We should encourage charter schools. That helps teachers because it 
liberates the teachers and school leaders to use their own good 
judgment to help the children assigned to them. I am encouraged that 
the new Secretary of Education has encouraged charter schools.
  Teach for America helps to supply new raw talent to the classroom, 
and I think, even more important, forms an alumni corps of support for 
excellence in the public schools, once those young teachers go on to 
whatever else they plan to do.
  Teachers' colleges. They need to be improved. One way to do it would 
be to award peer-reviewed, competitive research grants on the agendas 
most of them will not touch: how to give parents more choices, how to 
reward outstanding teaching, how to make charter schools successful, 
and how to help newly arrived children learn English.

[[Page S4929]]

  UTeach is another idea formed at the University of Texas-Austin. The 
America COMPETES Act that we passed in a bipartisan way in 2007 carries 
that nationally. It funds scholarships at universities where good 
students in math and science will switch to teaching.
  Summer academies. Senators Reid and Kennedy, a whole group of us, 
have helped to create summer academies for outstanding teachers of U.S. 
history, as well as the sciences. These are inexpensive and enriching 
and they do not intrude very much into State and local responsibility.
  School leaders. The biggest bang for the buck that we can do from 
here, or that States could do, or that school districts could do, is 
training school leaders. Generally, our role could be to expand the 
Teacher Incentive Fund and the New Leaders for New Schools Program.
  Our higher education system is molded upon the Lincolnian principles. 
It is also the best in the world. Our K-12 system is smothered by 
commands and controls from Government and the unions. It is a source of 
constant concern. Republicans should create proposals and policies that 
confer opportunities for parents, teachers, students, school leaders, 
and researchers, and stay away from programs that create command-and-
control orders from politicians and regulators.
  That is a lesson from our founder, Abraham Lincoln.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Virginia.
  Mr. WEBB. Mr. President, I ask unanimous consent to speak as in 
morning business and that the time not be charged to the Durbin 
amendment.
  The PRESIDING OFFICER. Without objection, it is so ordered.


                 REMEMBERING THE FALL OF SOUTH VIETNAM

  Mr. WEBB. Mr. President, I have a resolution I have left at the desk 
which would honor the Vietnamese refugees who came to this country 
after the fall of South Vietnam. I would like to take a few minutes to 
discuss the importance of this day, April 30.
  Today is a day that, for Vietnamese around the world, is as 
significant as the distinctions that are often made in other cultures 
between B.C. and A.D. Thirty-four years ago, on April 30, 1975, the 
Communist forces from North Vietnam finished their conquest of the 
south, and the struggling, war-torn country of South Vietnam ceased to 
exist. Many who fought on the Communist side and others who supported 
them believe that the motivation for pursuing this war was the 
unification of the country and independence from outside influence, and 
in many ways the position that they took, and the loss of 1.4 million 
Communist soldiers on the battlefield in pursuit of that position, is 
understandable. But it is just as understandable to recognize and honor 
the aspirations of the overwhelming majority of the people of South 
Vietnam who fought long and hard at a cost of 245,000 battlefield 
deaths for a government that, like our own here in the United States, 
allows true political and individual freedom.
  Those aspirations fell to the wayside as North Vietnamese tanks 
entered Saigon in blatant violation of the 1973 Paris Peace accord and 
instituted a harsh, Stalinist system of government that was marked at 
the outset by cruel recriminations toward those who had resisted its 
takeover. And thus, for millions of Vietnamese around the world, April 
30 is a reminder of the loss of everything, including their homes, 
their way of life, and their hopes for a prosperous and open future for 
the country that they loved.
  Americans in general tend to avoid or ignore this day and the 
significance it has not only on the Vietnamese but also on our own 
history. But it is important for us to look back on that day and on the 
war itself, not in anger but in fairness, in a way that gives credit 
where credit is due. And it is also important, for all of the reasons 
that led many of us to support that war endeavor, that we commit 
ourselves to working together to build the right kind of dialogue with 
the present Government of Vietnam in order to help bring a better 
future for the Vietnamese people and a more stable strategic 
environment in east Asia as a whole.
  Frankly, I believe this war still divides Americans in a way that 
they still feel but no longer openly discuss. I am not sure we can even 
agree on the facts, much less the rightness or wrongness of our 
policies, that caused us to commit our military to that battlefield, 
with the eventual loss of 58,000 dead and another 300,000 wounded. Was 
it right to go into Vietnam? Was it important? If you ask those in 
academia, the predictable answer, growing ever more predictable as the 
years cause us to summarize the war ever more briefly, is that it was a 
mistake. And yet here is a piece of data that should still cause all of 
us to think again. In August, 1972, 8 years after the Gulf of Tonkin 
incident that brought us full-bore into Vietnam, even at a time when 
the Nation had grown weary of bad strategies, after tens of thousands 
of combat deaths, and years of massive antiwar protests, a Harris 
Survey showed that 72 percent of Americans still believed that it was 
important that South Vietnam not fall into the hands of the Communists, 
with only 11 percent disagreeing.
  Over the years, we have lost the reality of those concerns. Too often 
in today's discussions that examine the Vietnam war, we are overwhelmed 
by mythology. I hear it said quite often that this was a war between 
the United States and Vietnam. Nothing could be further from the truth, 
and nothing could be more offensive to the millions upon millions of 
Vietnamese who supported the South Vietnamese Government and its long-
term goal of a stable democracy. Our attempt to help that government 
was no different than the manner in which we assisted South Korea when 
it was attacked after being divided from North Korea, or the motivation 
that caused us to support West Germany when the demarcation line at the 
end of World War II divided Germany between the Communist east and the 
free society in the West. We were not successful in that endeavor in 
Vietnam for a number of reasons. But it would be wrong to assume that 
this was an action by our country against the country of Vietnam, or 
that it was motivated by lesser ideals.

  We hear a lot of dismissive talk about the domino theory and the 
supposedly unjustified warnings about what was going on in the rest of 
the region with respect to efforts that were backed by the Soviet Union 
and Communist China in the runup to our involvement. But these were 
valid concerns at the time. The region had seen a great deal of turmoil 
during and after World War II. Most of the European colonial powers had 
receded throughout Southeast Asia, largely because of the enormous 
costs of that war, leaving poverty, war damage and unstable governments 
behind. Japan had withdrawn from the territories it had invaded and 
occupied. Governmental systems throughout the region were in 
transition, many in chaos. The Communists had moved into power in 
China. Within a year North Korea invaded South Korea, and were joined 
on the battlefield by the Chinese. Indonesia endured an attempted coup, 
sponsored by the Chinese.
  In fact, Lee Kuan Yew, the brilliant leader who created modern 
Singapore, has said many times that the American effort in Vietnam was 
a key contribution in slowing down communism's advance throughout the 
region, and allowing the other countries in the region to stabilize and 
prosper. The point, simply made, is that there was a great deal of 
strategic justification for what we attempted to do.
  This brings us to April 1975. A North Vietnamese offensive had begun 
in the aftermath of a vote in this Congress to cut off supplemental 
funding to the Government of South Vietnam. This was combined with a 
massive refurbishment of the North Vietnamese army, with the assistance 
of China and the Soviet Union, that allowed the offensive to kick off 
at a time when our South Vietnamese allies were attempting to 
reorganize their positions in order to adapt to the reality that they 
were going to get markedly less funding in terms of vital supplies such 
as ammunition and parts for their American-made weapon systems, as well 
as medical supplies.
  The events following the fall of Saigon on April 30, 1975, have never 
really been given the proper attention, probably because proper 
attention would embarrass so many people who had

[[Page S4930]]

downplayed the dangers of a Communist takeover. A gruesome holocaust 
took place in Cambodia, the likes of which had not been seen since 
World War II. Two million Vietnamese fled their country--usually by 
boat--with untold thousands losing their lives in the process, and with 
hundreds of thousands of others following in later years. This was the 
first such Diaspora in Vietnam's long and frequently tragic history. 
Inside Vietnam a million of the South's best young leaders were sent to 
reeducation camps, where 240,000 stayed for longer than four years. 
More than 50,000 perished while imprisoned, and others remained 
captives for as long as 18 years. An apartheid system was put into 
place that punished those who had been loyal to the U.S., as well as 
their families, in matters of education, employment and housing. The 
Soviet Union made Vietnam a client state until its own demise, pumping 
billions of dollars into the country and keeping extensive naval and 
air bases at Cam Ranh Bay.
  As a consequence of that bitter day in April, 1975 there are now more 
than 2 million Americans of Vietnamese descent. We are better off as a 
nation for their contributions to our society, at every level. It was 
not always easy for these refugees when they arrived during the late 
1970s, to a country that had been so torn apart by the war itself. But 
they won the rest of us over with their perseverance, their reverence 
for education, and their dedication to their families. Our gain, at 
least in the short term, was Vietnam's loss.
  It is important that Americans understand this journey, because those 
who lived it deserve a fair place at the table as we continue to work 
toward better relations in the Vietnam of today. Not to undertake a new 
round of recriminations; not to relive the bitterness of the past; but 
to build a proper bridge between our country and Vietnam, for the good 
of both countries, for the health East Asia, and for the benefit of all 
the people inside today's Vietnam.

  With respect to the region, Vietnam remains one of the most important 
countries in terms of the manner in which the United States should be 
preserving all of its legitimate interests on the East Asian mainland. 
With the steady accretion of Chinese influence to the north, the 
expansion of India to the southwest, and the evolution of Muslim 
influence in Southeast Asia in countries such as Indonesia, Malaysia 
and the southern reaches of the Philippines, Vietnam, along with 
Thailand and Singapore, are absolutely vital to our posture as an Asian 
nation.
  With respect to the Hanoi Government, with which I have had a long 
and not always pleasant relationship since 1991 when I first returned 
to Vietnam, I have a great appreciation for the very significant 
strides they have made since those early days. The relationships that 
are now evolving between Vietnam and the United States are healthy. In 
the long term, I believe they are going to be successful. And even 
though I remain proud of my Marine Corps service in that war so many 
years ago, I welcome them. When I first returned to Vietnam in 1991 I 
went to Easter Mass at the Hanoi cathedral. There were perhaps 20 
people in the church, all of them elderly. Last Christmas I attended 
Christmas Mass and there were at least 2,000 people in the church, 
overflowing into the courtyard. People can argue around the edges--we 
can have our political debates--but this is progress. We need to reward 
those strides with reciprocal behavior, even if we remain at odds on 
other issues. There is a lot to be proud of in terms of the 
transformations that have been going on in Vietnam. Vietnam is growing. 
It is growing economically. It is growing politically. It is reaching 
out to the rest of the world. It is acting responsibly in the 
international arena. We have much to do with that success, and we have 
much work to do. We have much work to do in terms of encouraging more 
openness and greater political freedom. But we are on a pathway where, 
with the right kind of continued dialogue, I believe all of that is 
going to occur.
  And so I would like to reemphasize that the best legacy for those of 
us who care deeply about this issue, and who remember all the tragedies 
of the war, will be for us to see Vietnam, the Vietnam of today, as a 
strategic and commercial partner and also as a vibrant, open society 
whose government reflects the strength of the culture itself, a 
strength that has been demonstrated over and over again by the 
Vietnamese who have come to this country and who, I am proud to say, 
are now Americans.
  I yield the floor and suggest the absence of a quorum.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. HARKIN. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. HARKIN. Mr. President, I ask unanimous consent to speak for up to 
15 minutes on the Republican time.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. HARKIN. Mr. President, I strongly support Senator Durbin's 
amendment. It will facilitate and promote negotiation and restructuring 
of mortgage debt on primary residences, which is a sensible and 
preferable alternative to foreclosure and all the negative consequences 
that process involves. I cosponsored earlier versions of this measure 
introduced in the last Congress by Senator Durbin as well as this one. 
I am proud to cosponsor the current amendment.
  Including this provision in the housing bill is absolutely critical 
to helping an estimated 1.7 million homeowners facing foreclosure to 
obtain modifications of their loans so they can return to making 
payments and stay in their homes. This, in turn, would contribute 
powerfully to stabilizing the housing market and the entire financial 
sector, allowing our economy to recover.
  For nearly 2 years now we have seen a devastating wave of home 
mortgage foreclosures all across America. Foreclosure exacts a painful 
toll on borrowers who cannot keep up with their payments. Let's not 
avoid the harsh realities: foreclosure means families--many oftentimes 
with young children--are forced out of their homes. It is a wrenching 
and emotionally devastating process.
  But we also need to appreciate that the broader economic consequences 
of all of these foreclosures are overwhelmingly negative. The lender 
still loses money. The value of houses in the surrounding neighborhoods 
declines further. So-called toxic assets held by financial institutions 
and investors become even more toxic. The financial system and the 
broader economy suffer further damage. This is totally 
counterproductive, as we have seen vividly over the last year. It 
simply makes no sense to continue down this failed path of massive home 
mortgage foreclosures.
  The Durbin amendment offers a far more promising and productive 
approach. Keep in mind that ``foreclosure'' is a legal shorthand for a 
process that cuts off or extinguishes the ability of a borrower to pay 
debt and remain in the home. It literally, as the word is used, 
forecloses any other options. The Durbin amendment, by contrast, 
encourages debtors and creditors to seek and negotiate sensible, 
workable, and economically feasible options or alternatives. What 
Senator Durbin is proposing very faithfully applies the hard lessons 
learned as borrowers, lenders, and our Nation worked their way out of 
the agricultural credit crisis of the 1980s.
  There are a lot of similarities between the farm crisis in the 1980s 
and the home mortgage and foreclosure crisis of today. In both 
instances, the value of the underlying assets--farmland in one case, 
houses in another--rose very steeply. In both cases, debts secured by 
those underlying assets rose very rapidly also. In both situations 
income available to pay off debt fell--in the farm crisis because of 
lower commodity prices, in the housing crisis because of unemployment 
and lower wages and salaries. In both instances the asset bubble burst. 
It was not only a matter of being unable to make payments; the asset 
values could no longer support the loan. With many farms, as now with 
many houses, the borrower owes much more than the real estate is 
mortgaged for.
  So for a while in the farm crisis, both borrowers and lenders tried 
to ignore and deny what was totally an unsustainable situation. 
Eventually,

[[Page S4931]]

some lenders relented and started working out new loan terms that would 
reschedule payments, modify interest rates, and, in some cases, write 
down the debt a little bit. However, not all lenders would engage in 
that type of negotiation. For whatever reason, they did not want to 
recognize the economic reality: that not all of the debt could be 
repaid and that there was not enough collateral value left to pay off 
the loan, even if they went through foreclosure.
  So what happened is, Congress had to step in and bring a dose of 
reality to resolving the farm debt. It did so by enacting chapter 12 to 
the Bankruptcy Code in 1986. I was here, a member of the Agriculture 
Committee at that time, working very diligently in trying to get 
through this farm credit crisis. But when we did that, Congress gave to 
family farms and ranches the debt restructuring remedy that had been 
available to other business enterprises. Chapter 12 bankruptcy permits 
the courts--permits the court--to modify loans to family farmers, 
including those secured by a principal residence.
  Professor Neil Harl of Iowa State University, one of the most 
respected agricultural economists in the Nation, conducted 
authoritative studies of the impacts of chapter 12 bankruptcy. One of 
the more significant findings by Professor Harl was that some 84 
percent of the original filers for chapter 12 bankruptcy were still 
farming or owning agricultural land 7 years later. So this was an 
astonishingly successful outcome, exceeding the expectations of even 
the most enthusiastic supporters of chapter 12 bankruptcy legislation. 
Professor Harl also concluded that chapter 12 provisions did not--did 
not--have a significant effect on interest rates. Again, this was 
contrary to the dire predictions by many lenders at that time--the same 
dire predictions that we are hearing from lenders today.
  As Professor Harl pointed out, both in the 1980s during the 
agricultural sector, and in the 2007-2008 housing sector, the losses 
have already occurred because the borrowers who received relief would 
otherwise have been unable to repay their loan. So, again, we heard all 
of these dire predictions of why we can't let the bankruptcy court come 
in and do something other than foreclosure--to modify, to write down 
the debt a little bit, stretch out the payment times. What we did for 
many farmers at that time--they may have had high-interest loans for 7 
years, 10 years. What we did, the courts came in, reduced the interest 
rates and strung out the payments for 20 years, 30 years. That is why 
so many years later farmers were still farming because they knew the 
underlying asset was still valuable. It was still productive. They just 
had to get through a bad rough spot. So there are a lot of farmers 
today still very much engaged in agriculture or ranching. That would 
not be so today had we not enacted that chapter 12 for agriculture in 
the mid-1980s.
  So the provisions of the Durbin amendment give powerful incentives to 
financial institutions to work constructively with those in financial 
difficulty. Indeed, by giving the bankruptcy judge authority to force 
modification to mortgages on primary residences, as is the case with 
other assets, there is a real incentive to come to terms. I have never 
understood why a bankruptcy judge can force modifications to other 
assets but not on the primary residence. Well, we had the same 
situation in the 1980s, and we extended it to farms and, as I said, as 
Professor Harl showed, the rest is history. It succeeded beyond 
anyone's wildest expectations.
  By giving this authority, again, to the bankruptcy judges, as I said, 
there is an incentive for both the financial institution and the 
borrower to come to some terms. This is very helpful for a person in 
difficulty, and it is very often in the interests of the owner of the 
mortgage, though it admittedly is not always in the interests of the 
mortgage servicer. We want to give relief to homeowners facing 
foreclosure not just for their benefit but for our benefit--the benefit 
of our economy.
  So I urge my colleagues to support the Durbin amendment. Again, as we 
saw during the chapter 12 bankruptcy proceedings during the farm crisis 
in the 1980s, these provisions will allow many people to retain their 
homes and to weather this terrible economic downturn. Generally 
speaking, lenders will not lose any money they would not already stand 
to lose if they were to force foreclosure.
  As I said, I believe there is a very correct and almost similar 
parallel to what we did in the 1980s with farms. People who are in 
financial difficulty today because of the downturn in the economy are 
going to be productive workers in the future. Why force them out of 
their homes when a modification such as stretching out payments, 
reduction of interest rates, could keep them in their homes, keep up 
the value of the surrounding property around them so they don't get in 
this downward spiral in their communities. To me, this makes eminently 
good sense.
  Also, the positive consequences for our economy would be profound. An 
estimated 1.7 million families would be able to avoid foreclosure and 
keep their homes. The housing crisis, as I said, would receive much 
needed support. The housing market would be able to stabilize. All of 
this would be a much needed tonic for our economy.
  So I commend Senator Durbin for always being on the leading edge, as 
he has been in the past. This is an amendment that I don't know why it 
isn't just accepted. It should be adopted overwhelmingly. As I said, we 
have a precedent for it. We know what happened in the past, and we know 
the same thing applies today.
  So I urge my colleagues to wholeheartedly support the Durbin 
amendment for individual homeowners, for communities, but for our 
overall economy.
  With that, Mr. President, I yield the floor.
  The PRESIDING OFFICER. The Senator from Illinois.
  Mr. DURBIN. Mr. President, I wish to thank my colleague from Iowa for 
his kind and supportive statement about this pending amendment.
  For the information of my colleagues, I have spoken to the Republican 
cloakroom. I believe this has been cleared, and if it hasn't, I will 
subject it to further modification. We have some 30 minutes remaining 
in the debate on this amendment that is pending, and it is to be evenly 
divided, 15 minutes to each side. So for the information of my 
colleagues, we expect the vote to be in the neighborhood, in the range 
of 2:45, if they want to make their plans accordingly, unless the 
Republican side yields back the 15 minutes they have remaining, which 
is their right, but they are certainly not compelled to do it. So I am 
not asking for a consent. I hope I am just explaining what the current 
consent order will lead us to.
  Mr. President, I wish to show America what this debate is all about. 
It is about this: This picture was taken on Capitol Hill. Two adjoining 
homes on Capitol Hill, No. 822 on Capitol Hill, a neatly kept home--
flower box, some work with some shrubbery here, nicely painted, 
obviously a lot of pride of ownership. Look next door. What do we find? 
A foreclosed property on Capitol Hill. This person is making his 
mortgage payment every month faithfully. This person is foreclosed on. 
The property is in the hands of a bank. This property is deteriorating. 
As it deteriorates, so does the value of the good-looking home right 
next door.

  That is not an unusual story. It is a story that will be repeated 8 
million times over the next several years because that is what Moody's 
estimates will be the number of mortgages foreclosed upon in America if 
we do nothing--8 million mortgage foreclosures. Out of all the home 
mortgages in America, it means that one out of six will be foreclosed 
upon.
  This is an American tragedy coming to your neighborhood, coming to 
your home, coming to what may be the most important asset you have on 
Earth. It does not have to happen. We can do things now to make a 
difference. We have waited patiently for the banking industry to show 
leadership on this issue for years. They have failed. There has been 
one excuse after another why they cannot step in and help people 
renegotiate their mortgages.
  Foreclosure is not a day at the beach for a bank. It costs them up to 
$50,000, sometimes more. They end up owning property, which is not what 
most bankers go to business school to learn how to do, and the property 
deteriorates, the value deteriorates, and they are stuck with it.
  We have said to them: Let's find a way out of this that is 
reasonable.

[[Page S4932]]

Let's give to those facing mortgage foreclosure a last chance in 
bankruptcy court to have the judge try to adjust the value of the 
principal of the mortgage no lower than the fair market value of the 
home--that is the best that any bank could ever hope for, if they could 
ever sell this property--no lower than the fair market value of the 
home and an interest rate that is competitive with market rates. If the 
person in bankruptcy has enough income to make the payment, give them 
that second chance. The banks say: No, never, even though that kind of 
a power in bankruptcy court is available for every other piece of real 
estate you own--the farms Senator Harkin of Iowa spoke to, ranches, 
vacation condos. It does not apply to a person's home. Why? Why 
wouldn't we apply it to a person's home? That is what the Durbin 
amendment does.
  We said to our friends in the banking community: We are going to give 
you the last word, and here is what we are going to tell you: Anybody 
who wants to go to bankruptcy court to have their mortgage rewritten by 
the bankruptcy court first has to go back to the bank where they have 
their mortgage at least 45 days in advance of filing bankruptcy and put 
all of their documentation on the table as to their income and their 
net worth. If the bank then makes them an offer of a mortgage that has 
a mortgage-to-income ratio of 31 percent, which is the standard we are 
using now, if the bank makes that offer, whether the borrower takes it 
or not, the bank is protected, the person can't go to bankruptcy court. 
The bank has the last word in terms of whether anyone can even raise 
this issue in bankruptcy.
  I have been working on this for 2 years. By Senate standards, that is 
a heartbeat. In this place, you better get ready to hunker down and 
fight for months and years at a time if it is an important issue, and I 
still am. But for 2 years, we have been working with the banks trying 
to come up with a reasonable way to avoid this tragedy in neighborhoods 
across America. They are the ones who came up with the 45 days before 
filing for bankruptcy. They wanted us to restrict it so it is not in 
the future, it only applies to existing mortgages. We said OK. They 
wanted to put a limitation on the value of the home, $729,000; that is 
the most you can consider to refinance. We said OK. They wanted to make 
sure a person had been delinquent at least 60 days before they could 
even consider bankruptcy. We said OK. We did all of these things 
because the banking industry said that way people will not be doing 
irresponsible things and taking advantage. We did them all. We made all 
these concessions. I do not agree with some of them, but that is the 
nature of compromise, that is the nature of the legislative process.
  What happened at the end of the day after we made all these 
concessions? I will tell you what happened. The bankers got up and 
walked out. That is right. The American Banking Association, the 
community bankers, the major banks, such as JPMorgan Chase, Wells 
Fargo, Bank of America, and the credit unions walked out. They want 
nothing. They want no change. Only Citigroup said: We will stick with 
you; we think it is reasonable. They are the only ones.
  If you ask them why they are opposing this effort to try to 
renegotiate a mortgage to keep a family in their home to avoid this 
mess, they say: Senator, you don't understand. It is about the sanctity 
of the mortgage contract.
  Really? We know how some of these mortgages came to be. They came to 
be as a result of at least misleading the borrowers, if not outright 
fraud.
  They used to call these mortgages no-doc mortgages. Do you know what 
that means? It means they were giving mortgages to people without any 
proof of income or net worth. If you dialed that 800 number on the 
television screen, a fellow would show up, set up your closing in 48 
hours, and get it done. Just keep signing those papers, incidentally, 
until you get to the bottom of the pile and everything is taken care 
of. Six months, 1 year, 2 years later, that mortgage exploded in the 
faces of these homeowners.
  Then there were others. They didn't get suckered into these subprime 
mortgages; they were folks just making their payments, everything was 
fine. Then the bottom fell out of the real estate market.
  What is your home worth today? I can tell you what it is in 
Springfield, IL, my home I have been in for 30 years. The value of my 
home is down at least 20 percent. Did I miss a mortgage payment? No, 
but it is the state of the real estate market. Lucky for me and my 
wife, we paid down enough on our mortgage so it is no big problem. For 
some people, they went underwater. The value of the home is lower than 
the principal of the mortgage they were paying off. So their credit 
rating disintegrated as a result of that. The value of the home here, 
well kept and well painted, goes down because of a foreclosed home next 
door, and the credit rating of this homeowner deteriorates and 
disintegrates to the point where they cannot refinance their home. That 
is the reality. That is the catch-22.
  The banks are arguing the sanctity of the mortgage contract. I have 
news for them. The bankruptcy court is all about looking at contracts. 
That is what they do anyway. When we reformed the Bankruptcy Code a few 
years ago, I didn't hear any argument about the sanctity of the 
contract when we changed the rules of the game. In that case, the 
financial institutions liked changing the rules, liked changing the 
contract. Now they are for the sanctity of the contract.
  One other argument I think takes the cake: Senator, you don't 
understand the moral hazard here. People have to be held responsible 
for their wrongdoing. If you make a mistake, darn it, you have to pay 
the price. That is what America is all about.
  Really, Mr. Banker on Wall Street, that is what America is all about? 
What price did Wall Street pay for their miserable decisions creating 
rotten portfolios, destroying the credit of America and its businesses? 
Oh, they paid a pretty heavy price--hundreds of billions of dollars of 
taxpayers' money sent to them to bail them out, to put them back in 
business, even to fund executive bonuses for those guilty of 
mismanagement. Moral hazard? How can they argue that with a straight 
face? They do.
  Let me show you what this means in some of the States across the 
United States if the Durbin amendment would pass.
  Take a look at the State of Florida. This State is really hard hit; 
206,000 homes would be saved from foreclosure with the Durbin 
amendment--206,000 in the State of Florida. For the rest of the 
homeowners in the State, $36 billion in value in their homes would be 
protected because we saved these homes.
  Take a look at the State of Ohio. Almost 44,000 homes will be saved 
by the Durbin amendment; $1.5 billion in real estate values saved for 
the people who live next door and on the same block.
  The State of Pennsylvania: 37,000 homes saved; $3.3 billion in real 
estate value protected.
  The State of Maine, a small State but almost 5,000 homeowners would 
not face foreclosure because of the Durbin amendment, and $104 million 
in value would be protected for homeowners across the State of Maine.

  In the State of Missouri, 22,000 homes saved; $993 million in value.
  I want to show a chart from the city of Chicago, which I am proud to 
represent. It looks as if it has the measles, doesn't it? This chart 
shows the foreclosures in 2008, the filings in the city of Chicago. 
Have you ever flown into Midway Airport and looked down at the little 
houses, the little blond, brick bungalows? They have been around at 
least since World War II. Good, hard-working families are in those 
homes, starter homes for some, above-ground pools in the backyard, nice 
little flowers planted in the front yard, no trash out in the streets. 
These people are, by and large, ethnic folks, immigrant folks. They 
value that home. It is the best thing they have going for them. In that 
ZIP Code right around Midway Airport, there is not a single block in 
that ZIP Code that does not have a foreclosed home. Not one. And you 
tell me what that means to the folks living next door. I know what it 
means. It means that the value of their home just went down, and if the 
foreclosed home is not watched carefully, even worse things can occur.
  Here is what it comes down to. This is our chance to stand up for the 
folks across America who send us here to be their voice. They are not 
lucky enough

[[Page S4933]]

to have the American Bankers Association as their lobby. They are not 
lucky enough to have the community bankers as their lobby. They are not 
lucky enough to have the credit unions as their lobby. What we are 
talking about here are people who do not have any paid lobbyists. What 
they are counting on is Senators in this Chamber who will stand up for 
them.
  The bankers don't want this. They hate the Durbin amendment like the 
devil hates holy water. That was an old saying, which I particularly 
like, from Dale Bumpers, who served from the State of Arkansas. They 
hate this amendment so much, so they negotiated for weeks and at the 
end of it pulled the plug--we are going to walk away. We are going to 
tell all of our friends, all of our loyal friends to vote no.
  I hope the homeowners across America have more friends here than the 
American Bankers Association. We are going to get a test vote in a few 
minutes to find out. I need 60 votes to win. That is not easy, I know 
it. I don't know how many, if any, votes will come from the other side 
of the aisle. I have spoken to a few over there, even some on this side 
of the aisle, one who has spoken out against this proposal, and that is 
his right to do. To me, at the end of the day, this is a real test as 
to where we are going in this country.
  Next up after mortgages is credit cards. Next week, the bankers can 
come in and see how much might and power they have in the Senate when 
it comes to credit card reform.
  The question we are going to face is whether this Senate is going to 
listen to the families facing foreclosure, the families facing job loss 
and bills they cannot pay or whether they are going to listen to the 
American Bankers Association, which has folded its arms and walked out 
of the room. I hope we have the courage to stand up to them. I hope 
this is the beginning of a new day in the Senate, a new dialog in the 
Senate that says to bankers across America: Your business-as-usual has 
put us in a terrible mess, and we are not going to allow that to 
continue. We want America to be strong, but if it is going to be 
strong, you should be respectful, Mr. Banker, of the people who live in 
the communities where your banks are located. You should be respectful 
of those hard-working families who are doing their best to make ends 
meet in the toughest economic recession they have ever seen. You should 
be respectful of the people you want to sign up for checking and 
savings accounts and make sure they have decent neighborhoods to live 
in. Show a little bit of loyalty to this great Nation instead of just 
to your bottom line when it comes to profitability. Take a little bit 
of consideration of what it takes to make America strong because when 
this country is strong, when families can stay in their homes, take 
pride in their homes, and our communities are better, guess what. You 
are going to do better as a banker. That is what will happen at the end 
of the day.
  When I offered this amendment last year, they said: Not a big 
problem; there are only 2 million foreclosures coming up. They were 
wrong. It turned out to be 8 million. And if the bankers prevail today 
and we cannot get something through conference committee to deal with 
this issue, I will be back. I am not going to quit on this issue. 
Sadly, the next time I get up to speak, whenever that might be, if we 
are not successful today, it may not be 8 million, it may be 10 million 
or 12 million.
  At some point, the Senators in this Chamber will decide that the 
bankers should not write the agenda for the Senate. At some point, the 
people in this Chamber will decide that the people we represent are not 
the folks working in the big banks but the folks struggling to make a 
living and struggling to keep a decent home. That is the test.
  I hope my colleagues will join me in adopting the Durbin amendment.
  Mr. President, I ask unanimous consent that at 2:45 p.m. today, the 
Senate proceed to vote in relation to Durbin amendment No. 1014 and 
that any provisions of a previous order relating to this amendment 
remain in effect.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. DURBIN. Mr. President, 1.7 million is the number of families that 
we will either help stay in their homes or allow to lose their homes 
and be thrown on to the street.
  Tomorrow the Senate will have the opportunity to vote for an 
amendment to the Helping Families Save Their Homes Act that would 
enable 1.7 million families to avoid foreclosure.
  My amendment would make a small change to the bankruptcy code to give 
these families a little bit of leverage as they work with their lenders 
to create a modified mortgage that they can afford.
  When we can avoid foreclosures and families can stay in their homes, 
everyone wins--the families, their neighbors, their lenders, and the 
government. We can save 1.7 million homes with one vote.
  I have come to the floor each day this week to talk about the scale 
of the problem and what we believe we should do about it, in very 
general terms.
  Now I would like to get specific.
  Let me be clear: this is a very different amendment to the bankruptcy 
code than my colleagues have seen before.
  This amendment would integrate assistance in bankruptcy to the two 
primary foreclosure prevention efforts already underway: the Obama 
administration's Homeowner Assistance and Stability Plan and the 
congressionally created Hope for Homeowners refinancing program which 
the other title of this bill will greatly improve.
  Our objective is to keep as many families in their homes as we can. 
Ideally none of these families would have to go through the painful 
process of a chapter 13 bankruptcy.
  So this amendment would help only troubled homeowners who could not 
find other assistance outside of bankruptcy first.
  Let me put it another way: mortgage servicers would be given full 
veto power over which of their borrowers could go to bankruptcy--they 
would be given the keys to the courthouse door.
  All a servicer would have to do to block a borrower from going to 
bankruptcy for a mortgage modification would be to offer the borrower a 
modification that conforms to the standards of the Homeowner 
Affordability and Stability Plan or Hope for Homeowners--regardless of 
whether the borrower accepts the offer or not.
  For banks and credit unions that aggressively offer modifications to 
borrowers who are in trouble, the total number of their borrowers who 
will be eligible for bankruptcy assistance will be exactly zero.
  Specifically if a servicer offers a loan modification that reduces 
the borrower's mortgage debt-to-income ratio to 31 percent--the same as 
the Housing Affordability and Stability Plan--or if a servicer offers 
Hope for Homeowners refinancing, then that borrower could not run to a 
judge looking for a better deal through a cramdown. For those borrowers 
that the servicer chooses not to modify voluntarily and that must file 
for bankruptcy, half of any cramdown would be returned to the servicer 
if the borrower resells the home while still in bankruptcy.
  For these borrowers that the servicer chooses not to help, the courts 
would be constrained as follows: The judge could only reduce the loan 
principal to fair market value, which is much more than the lender 
would collect if the home were to be sold in foreclosure. The judge 
could only reduce the interest rate to the conventional rate plus a 
reasonable premium for risk, which at the moment would equal around 6.5 
percent to 7 percent.
  And the judge could only lengthen the term to the longer of 40 years, 
reduced by the period for which the mortgage has been outstanding or 
the remaining term of the mortgage.
  There are many further restrictions. Loans originated after 2008 are 
not eligible for bankruptcy assistance.
  Loans that are larger than the largest conforming loan limit are not 
eligible for bankruptcy assistance. Loans that are not 60 days 
delinquent are not eligible for bankruptcy assistance. Loans that are 
not in foreclosure are not eligible for bankruptcy. And the whole 
amendment would sunset at the end of 2012 when the Housing 
Affordability and Stability Plan expires.
  The banks hold the keys to the courthouse. And, even those borrowers 
the banks refuse to help can only receive assistance that still makes 
the banks far more money than the only other alternative: foreclosure.
  Yet even with all of these restrictions, Mark Zandi from Moody's 
Economy.com estimates that this change

[[Page S4934]]

would save 1.7 million families from foreclosure. Why? Because for most 
lenders, the Obama administration's foreclosure prevention plan is 
voluntary. This change to the bankruptcy code would encourage lenders 
to participate, because offering these modifications allows lenders to 
effectively veto a modification in bankruptcy. That is a large part of 
why the President supports this provision, and why he included it as a 
key element in his plan.
  This amendment would prevent foreclosures, which would help us find 
the bottom in the housing market, which would help the housing markets 
turn around more quickly, which would help the entire economy start 
moving again. Perhaps best of all, this amendment wouldn't cost the 
taxpayers a penny.
  Even though this new proposal is airtight in protecting lenders 
interests, the ideologues in the mortgage industry--outfits like the 
Mortgage Bankers Association, the Financial Services Roundtable, the 
American Bankers Association, the Independent Community Bankers 
Association, and the National Association of Federal Credit Unions--
still oppose providing this help to troubled homeowners and the economy 
at large.
  They continue to regurgitate the same tired talking points that have 
been refuted over and again by the facts.
  They seem to repeat the same six myths. Myth No. 1: Allowing troubled 
homeowners to receive mortgage assistance in bankruptcy will lead to 
higher borrowing costs for future borrowers. Reality: Although the 
Mortgage Bankers Association has claimed in front of the Senate 
Judiciary Committee that ``if this legislation goes through, we will be 
putting a permanent tax on everybody that buys a house going forward of 
$295 per month,'' there are several reasons why this argument makes no 
sense.
  First, future borrowers aren't eligible for this bankruptcy 
assistance, so there is no reason why future borrowers should have to 
pay more to compensate lenders for a risk that doesn't exist.
  Second, only borrowers for which foreclosure is the only other 
alternative are eligible for this bankruptcy assistance. Foreclosures 
almost always cost banks more than loan modifications that keep 
families paying each month. No extra costs are being borne by the banks 
that they could justify passing on to other borrowers.
  Third, a study by Adam Levitin of the Georgetown Law School proves 
definitively that the availability of bankruptcy assistance to some 
borrowers in the past led to no increase in borrowing costs for others.
  There is no reason to think that the same logic wouldn't apply in 
today's market that supports record low interest rates.
  Myth No. 2: Changing the bankruptcy code will cause uncertainty in 
the market. Reality: Although the American Bankers Association asserts 
that ``mortgage cramdowns would add significant risk and uncertainty to 
mortgage lending,'' it is in fact the rapidly rising foreclosure rate 
that is adding risk and uncertainty to mortgage lending.
  If potential homeowners think housing prices will continue to fall 
they will be unlikely to buy a home.
  Aggressively preventing foreclosures will keep unnecessary supply off 
of the market, which will stabilize prices and encourage buyers to 
return to the market.
  Since changing the bankruptcy code would save 1.7 million homes from 
foreclosure, the Durbin amendment would return a sense certainty to 
mortgage lending, not undermine it.
  Some of the loudest opponents of my amendment were the chief 
contributors to the most uncertainty in the credit markets since the 
Great Depression. They have no credibility to tell us what the markets 
may or may not judge to create uncertainty.
  Myth No. 3: Bankruptcy judges shouldn't be able to break the sanctity 
of the contract. Reality: The Chamber of Commerce argues that ``Cram 
down provisions would improperly expand the bankruptcy code by granting 
new powers to bankruptcy judges to modify the terms of existing, 
legitimate mortgage contracts.''
  Legitimate mortgage contracts? What is so legitimate about no-doc, 
interest only, negative amortizing loans that had almost no chance to 
succeed from the day they are underwritten?
  The concept of bankruptcy is enshrined in the Constitution, and 
bankruptcy has always been a venue in which contracts are restructured.
  The Chamber and the banking industry had no problem with applying the 
sweeping 2005 bankruptcy code changes to all contracts past, present, 
and future when those changes benefitted businesses. They have no 
standing to now argue that because of the sanctity of the contract the 
bankruptcy laws should not be changed.
  Myth No. 4: Allowing borrowers to modify mortgages in bankruptcy 
would shield borrowers from the consequences of their poor decisions to 
buy houses they could not afford, thereby creating a moral hazard. 
Reality: The industry that claims we should worry about moral hazard 
for borrowers is the same industry that helped create the greatest 
economic crisis since the Great Depression.
  Bankruptcy is a painful process for the borrower, not one that is 
taken lightly. The intent of the legislation is to create the necessary 
incentives for more modifications to take place outside of bankruptcy.
  And what about the families who have done everything right but have 
the misfortune of living next door to a foreclosure? If we save 
families from foreclosure we help their neighbors too. There's no moral 
hazard in that.
  My amendment would save the neighbors of prevented foreclosures over 
$300 billion in preserved home equity. I will talk much more about that 
when I return to the floor tomorrow.
  Finally, for many borrowers the problem isn't the home itself, but 
rather the high cost loan they are trapped in. Making the mortgage more 
affordable will make the home affordable for many families.
  Myth No. 5: Restricting this amendment to only subprime and exotic 
loans is better policy than providing this option to borrowers with all 
types of loans. Reality: Although the National Association of Federal 
Credit Unions--which is the smaller of the two credit union 
associations--continues to argue that we should allow ``bankruptcy 
modification [to] apply to only to subprime or Alt-A (or 
nontraditional) mortgage loans,'' I disagree.
  Last year I thought that this might be a reasonable compromise. But 
the foreclosure crisis has expanded far beyond subprime loans. The 
fastest-growing foreclosure rate by loan type is the traditional prime 
loan--once considered safe.
  We are no longer just trying to solve for bad mortgage underwriting. 
We're trying to turn around the entire economy, and to do that we have 
to stabilize the housing markets.
  Finally, how would we explain to our constituents that we're 
providing special assistance to borrowers who took out a riskier type 
of loan, but the families with a standard, conservative loan who may 
need a bit of help are out of luck?
  Myth No. 6: Because community banks didn't create this crisis, it 
would be better policy to carve out their borrowers from having the 
option of bankruptcy assistance. Reality: Look at this picture again. 
If a community bank really cares about the community it serves, why 
should this foreclosure be allowed to take place just because the 
borrower took out a loan with a community bank rather than a big 
national bank?
  Does that matter to the family who lost their home? Does that matter 
to the family living next door?
  These banking associations have generated many myths of terror and 
destruction that this amendment would create, but the legislative 
language speaks for itself. And it refutes each of these myths.
  Mr. President, 1.7 million families can be saved from foreclosure.
  This is the Senate's chance to finally address the heart of our 
economic crisis, with no bailout money involved.
  We may not have a better chance to help turn this crisis around.
  Today the Senate will vote on my amendment to the housing bill that 
would give 1.7 million families a chance to save their homes.
  I spoke earlier this week on the floor about the crushing impact to 
the broader economy that the foreclosure crisis has had.

[[Page S4935]]

  Mortgages were bundled into mortgage-backed securities, which were 
sliced and diced into ``synthetic collateralized debt obligations'' and 
similar products, which were then sold to unsuspecting investors all 
over the world.
  For a while there, they sold as if they were gold. Well, they are 
pretty tarnished now. They are now known as ``toxic assets.''
  But I urge my colleagues not to forget that underlying these exotic 
``toxic assets'' are things that we understand far more personally.
  At the root of the crisis is the home. Mr. President, 8.1 million of 
them may be lost, according to Credit Suisse. My amendment will help 
save 1.7 million of them.
  Also at the root of this crisis is the damage to the homeowners who 
live around these foreclosures, the neighbors who have made every 
mortgage payment on time. They stand to lose over $300 billion more, 
unless we pass my amendment.
  I want to emphasize this point for a moment. There are millions of 
families all over America that have done everything right--they bought 
only as much house as they could afford, and they have made every 
mortgage payment on time.
  Look at this picture. This house is well-kept, and appears to be the 
cherished home of a family that has acted responsibly. But this house 
next door, you can see what this house looks like.
  Clearly, the well-kept home is worth much less than it would be if it 
were next to another well-kept home instead of this boarded-up eyesore.
  Situations like this can be seen in each and every state that my 
colleagues and I represent. Families are in trouble, and their 
neighbors are suffering along with them.
  By voting for my amendment we can save 1.7 million of these troubled 
families from foreclosure and can save their neighbors over $300 
billion in home equity that would otherwise be lost.
  In Florida, for example, we estimate that over 200,000 more families 
will lose their homes in the next few years if we don't pass my 
amendment.
  Families like Derek and Kellyanne Baehr. As reported in local papers, 
Derek has been diagnosed with a rare neurological disorder that will 
eventually require him to use a wheelchair.
  The couple has lived in their modest, single-story stucco home for 
four years, and they are now struggling to pay their mortgage.
  After months of trying to work with their lender, they finally 
received a slight reduction in their interest rate, but ``it was like 
putting a Band-Aid on cancer,'' Derek said.
  ``We can't continue to go on this way,'' said Kellyanne. ``I cry 
about every day.''
  If my amendment were to become law, this family's lender probably 
would have offered more than a ``Band-Aid on cancer.'' The lender 
likely would have offered a modification that would have kept the 
Baehrs in their home and paying their mortgage.
  And, certainly, avoiding foreclosure would be a better result for 
both the Baehr's and the lender.
  The neighbors who live around families who are kicked out on to the 
street--like the Baehrs may soon be--typically see the value of their 
homes--their most valuable asset--take a nosedive.
  In Florida, neighbors of families that lose their homes will watch 
more than $36 billion of their assets evaporate unless we pass my 
amendment.
  In Ohio, we estimate that nearly 44,000 more families will lose their 
homes in the next few years if we don't pass my amendment.
  Some time ago I met the Glickens, a husband and wife from Ohio who 
were persuaded by a mortgage broker to commit to a mortgage that seemed 
fine at the start.
  Then, the adjustable interest rates kicked in. They soon were being 
asked to pay 60 percent more than the original payments, and they just 
couldn't keep up.
  Families like the Glickens are supposed to reach out to their lender 
to figure out how to modify the mortgage so that it is more affordable 
and so that foreclosure can be avoided.
  Avoiding foreclosure is better for the homeowner and the bank, right?
  Get this: the Glickens' lender charged them $425 to apply for a loan 
modification . . . and then turned them down anyway.
  The Glickens needed a bit more leverage to negotiate with their 
lender, leverage that the threat of bankruptcy assistance would 
provide.
  In Ohio, neighbors of families that lose their homes will lose more 
than $1.5 billion of their assets unless the Senate passes my 
amendment.
  In Pennsylvania, over 37,000 additional families will lose their 
homes in the next few years if we don't pass the Durbin amendment.
  As one example of many, a divorced father of twin boys in Levittown 
refinanced his mortgage after his divorce in an attempt to keep a 
stable home environment for his boys.
  The refinance placed him in an interest-only mortgage with American 
Home Mortgage, which itself went into bankruptcy.
  He ended up in chapter 13 trying to make the payments on all of his 
debts.
  But, the bankruptcy court could not help him restructure his mortgage 
under current law, even though the court has restructured each of his 
other debts to help him make his payments.
  Prior to filing for bankruptcy, he tried to reach an agreement with 
his lender, but he couldn't find anyone to talk to consistently about 
the situation and he was given no viable options to catch up on his 
payments.
  This single dad would have benefited from my amendment. So would his 
neighbors.
  In Pennsylvania, neighbors of families that lose their homes will 
watch more than $3.3 billion of their assets evaporate unless we pass 
my amendment.
  In Maine, nearly 5,000 additional families will lose their homes in 
the next few years if we don't pass this bankruptcy provision. If you 
are watching at home in California or New York that may not sound like 
a lot of families, but people who live in Maine know just how 
devastating those losses would be.
  For instance, a woman from Woolwich was barely making ends meet when 
she received a notice that the interest rate on her mortgage was going 
to increase by 3 percentage points.
  She immediately contacted the mortgage company and indicated that she 
could not handle the additional expense.
  The lender told her that they were not going to be able to work with 
her and there was nothing that they could do for her.
  I am confident this woman's lender would have tried a little harder 
to help if the threat of assistance in bankruptcy loomed.
  In Maine, neighbors of families that lose their homes will lose more 
than $100 million of their assets unless we pass my amendment.
  In Missouri, we estimate that 22,000 additional families will lose 
their homes in the next few years if we don't pass this amendment.
  We are talking about people like a Ford retiree in Kansas City who 
had fallen behind on his mortgage payments due to a high interest rate 
on the loan. He passed away, and his widow was unable to keep up with 
the payments.
  The home was worth far less than the outstanding mortgage balance, 
and she started to receive foreclosure notices. Her loan servicer was 
not receptive to a discussion regarding a loan modification.
  Her monthly income left her with about $700 after she made this 
mortgage payment. And her monthly heating bills that winter were $600.
  Again, I have to believe the availability of bankruptcy assistance 
would have encouraged her lender to work with her.
  In Missouri, neighbors of families that lose their homes will watch 
almost $1 billion of their assets disappear unless we pass my 
amendment.
  In my home State of Illinois, last year in Chicago alone nearly 
20,000 homes were in some stage of foreclosure.
  The red dots represent these 20,000 homes. They are everywhere. And 
the problem is getting worse.
  Statewide, my amendment would help 60,000 families avoid foreclosure. 
Their neighbors would preserve nearly $20 billion if my amendment 
becomes law.
  How could I not fight for this?
  Maybe I shouldn't take this amendment so personally. Perhaps I should

[[Page S4936]]

just argue dispassionately about the merits of the proposal, since the 
merits really do speak for themselves.
  But when a family loses its home, that is personal.
  The home is where parents tuck their kids in at night. It's where 
families share their daily stories over meals at the dining room table. 
It's where secrets are shared, where dreams are born, and where bonds 
are formed.
  Every foreclosure is a tragedy. Every foreclosure is deeply personal 
for the parents who have to explain to their kids why they can't sleep 
in their bedrooms anymore. Every foreclosure that can be prevented, 
should be prevented.
  The Senate can stop 1.7 million of them with one vote. The Senate can 
save their neighbors--our constituents--over $300 billion in the 
preservation of home equity with one vote. I urge a ``yes'' vote.
  I ask unanimous consent that the letter of support attached to this 
statement be submitted for the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

Help 1.7 Million Families Stay in Their Homes! Support the Foreclosure 
                     Amendment to the Housing Bill

                                                   April 29, 2009.
       Dear Senator: The undersigned consumer, civil rights, 
     labor, faith-based, housing, financial, and community 
     organizations representing tens of millions of Americans 
     strongly urge you to vote for the foreclosure prevention 
     amendment that will be offered by Senator Durbin when the 
     full Senate takes up the House-passed housing bill (``Helping 
     Families Save Their Homes Act'') later this week. Our 
     organizations long have supported legislation to empower 
     bankruptcy judges to modify mortgages on primary residences 
     so as to provide the ``stick'' financially strapped 
     homeowners desperately need to get their lenders to work with 
     them to prevent avoidable foreclosures. Absent this stick, 
     all the voluntary programs that have been put in place during 
     the last 18 months have failed to produce the modifications 
     necessary to save American families and repair the faltering 
     housing market.
       The amendment that will be offered on the Senate floor 
     substantially narrows previous versions by enabling the 
     servicer to prevent the borrower from obtaining a mortgage 
     modification in bankruptcy simply by offering the borrower an 
     affordable modification. Any such offer would bar judicial 
     modification of the borrower's mortgage forever. And, with 
     this ``stick'' in place, the new voluntary modification 
     programs have a substantially greater chance of succeeding, 
     which would help stop foreclosures and stabilize the economy.
       Mark Zandi of Moody's Economy.com projects that up to 1.7 
     million families will be able to save their home from 
     foreclosure if this amendment is approved. At a time when an 
     estimated 6,600 families are losing their home to foreclosure 
     each and every day, there is no time for delay. We urge the 
     Senate to support the amendment to lift the ban on judicial 
     modification of primary residence mortgages in extremely 
     narrowly drawn circumstances. Passage of this legislation is 
     the most important thing Congress can do right now to help 
     arrest the financial crisis and the terrible toll that it is 
     taking on American families.
           Sincerely,
       AARP.
       AFL-CIO.
       American Federation of State, County and Municipal 
     Employees (AFSCME).
       Americans for Fairness in Lending.
       Association of Community Organizations for Reform Now 
     (ACORN).
       Calvert Asset Management Company.
       Center for Responsible Lending.
       Central Illinois Organizing Project.
       Change to Win.
       Consumer Action.
       Consumers Union.
       Consumer Federation of America.
       DEMOS.
       International Association of Machinists and Aerospace 
     Workers.
       International Union, United Automobile, Aerospace & 
     Agricultural Implement Workers of America (UAW).
       Leadership Conference on Civil Rights.
       NAACP.
       National Association of Consumer Bankruptcy Attorneys. 
     National Community Reinvestment Coalition.
       National Consumer Law Center (on behalf of its low-income 
     clients).
       National Fair Housing Alliance.
       National Federation of Community Development Credit Unions.
       National NeighborWorks Association.
       National People's Action.
       National Policy and Advocacy Council on Homelessness.
       North Carolina State Employees Credit Union.
       Opportunity Finance Network.
       PaxWorld Mutual Funds.
       PICO National Network.
       Rural Advancement Foundation International--USA.
       Service Employees International Union.
       United Food and Commercial Workers International Union.
       U.S. PIRG.
       ACORN-NC.
       Affiliated Congregations to Improve our Neighborhoods, 
     Gainesville, FL.
       Baldwin County ACT II, Baldwin County, AL.
       Bayou Interfaith Together.
       Berkeley Organizing Congregations for Action, Berkeley, CA.
       Beyond Housing, MO.
       Birmingham Area Interfaith Sponsoring Committee, 
     Birmingham, AL.
       Brockton Interfaith Community, Brockton, MA.
       Brooklyn Congregations United, Brooklyn, NY.
       Camden Churches Organized for People, Camden, NJ.
       Communities Creating Opportunity--Kansas, Kansas City, KS.
       Congregations and Schools Empowered, Glenwood Springs, CA.
       Congregations Building Community, Modesto, CA.
       Congregations for Community Action, Melbourne, FL.
       Congregations Organizing for Renewal, South Alameda County, 
     CA.
       Congregations Organizing People for Equality (COPE).
       Congregations United for Neighborhood Action, Allentown, 
     PA.
       Connecticut Association for Human Services.
       Connecticut Legal Services.
       Consumer Credit Counseling Service of Forsyth County, Inc., 
     NC.
       Contra Costa County Interfaith Supporting Community 
     Organization, CA.
       Delta Interfaith Network (DIN).
       Essex County Community Organization, Essex County, MA.
       Fair Housing Law Project, CA.
       Faith in Action Kern County, Kern County, CA.
       Faith in Community, Fresno, CA.
       Faith United Empowering Leadership (FUEL).
       Faith Works, North San Diego County, CA.
       Federation of Congregations United to Serve, Orlando, FL.
       Financial Protection Law Center.
       Flint Area Congregations Together, Flint, MI.
       Florida Legal Services.
       Greater Long Beach Interfaith Community Organization, Long 
     Beach, CA.
       Greater Pensacola Community Organization, Pensacola, FL.
       Hope Ministry of Point Coupee.
       Housing Preservation Project, MN.
       Inland Congregations United for Change, San Berardino/
     Riverside/Coachella, CA.
       Interfaith Action, Rochester, NY.
       L.A. Voice, Los Angeles, CA.
       Legal Assistance Corp. of Central Massachusetts.
       Legal Assistance Resource Center for Connecticut.
       Massachusetts Communities Action Network, Boston, MA.
       Metro Organizations for People, Denver, CO.
       Metropolitan Interfaith Congregations Acting for Hope, 
     Framingham, MA.
       MICAH Project, New Orleans, LA.
       Moving in Congregations, Acting in Hope, Cortland County, 
     NY.
       National Housing Law Project, CA.
       Navy Marine Corps Relief Society, Camp Lejeunne, NC.
       North Carolina Community Action Association.
       North Carolina Housing Coalition.
       North Carolina State AFL-CIO.
       North Carolina State Conference of the NAACP.
       Northern Valley Sponsoring Committee, Yuba & Colussa 
     Counties, CA.
       Oakland Community Organizations, Oakland, CA.
       Orange County Congregation Community Organization, Orange 
     County, CA.
       Peninsula Interfaith Action, San Mateo County, CA.
       People Acting in Community Together, San Jose, CA.
       People and Congregations Together, Stockton, CA.
       PICO California, Sacramento, CA.
       PICO Louisiana Interfaith Together, Baton Rouge, LA.
       Public Justice Center, MD.
       Queens Congregations United for Action, Queens, NY.
       ROOF Project, Greater New Haven Community Loan Fund.
       Sacramento Area Congregations Together, Sacramento, CA.
       San Diego Organizing Project, San Diego, CA.
       San Francisco Organizing Project, San Francisco, CA.
       United Interfaith Action of Southeastern Massachusetts, New 
     Bedford/Fall River, MA.
       Vermont Interfaith Action, Burlington, VT.
       Western Massachusetts Legal Services.
       Working Interfaith Network, Baton Rouge, LA.
  Mr. BURRIS. Mr. President, as I address this Chamber today, more 
Americans find themselves face to face with the grim reality of home 
foreclosure than ever before. The magnitude of this problem is hard to 
overstate, and the human cost of forced evictions and shuttered windows 
is heartbreaking. In the midst of an unprecedented economic crisis, 
neighborhoods across the country are battered by month after

[[Page S4937]]

month of record foreclosures, and there does not seem to be an end in 
sight. We must therefore move with urgency to put an end to this crisis 
and help keep hardworking Americans in their homes.
  With this increasingly dire situation in mind, I urge my colleagues 
to pass the Durbin amendment to the Helping Families Save Their Homes 
Act.
  As it stands, 8.1 million homes are expected to be lost to 
foreclosure before we emerge from this crisis. The Durbin amendment 
would preserve more than $300 billion in equity for responsible 
homeowners and prevent 1.7 million of those mortgages from falling into 
foreclosure. Together with President Obama's Housing and Stability 
Plan, this measure would create strong incentives to modify mortgages 
outside of bankruptcy. Under this plan, a few troubled borrowers would 
receive controlled assistance in the court system. This empowers 
homeowners and also protects lenders to ensure that everyone is getting 
a fair deal.
  Some elements of the powerful banking industry oppose what I see as a 
commonsense solution. They seek to misrepresent our efforts to help 
Americans remain in their homes, despite the fact that this legislation 
safeguards their assets too, and even provides lenders with a ``veto'' 
over which of their borrowers can go into bankruptcy. Please do not 
fall victim to the myths that some have tried to spread about this 
bill. Let me be clear: this measure is not a stopgap, it is not a 
bailout, and it will not cost taxpayers one more penny. It is a 
pragmatic and effective solution to a set of problems that have been 
wreaking havoc on the American families for far too long.
  I applaud my colleague, Senator Durbin, for his leadership on this 
issue. Where others have pointed fingers and played partisan games, 
Senator Durbin has acted swiftly to provide a clear vision and a strong 
voice on behalf of troubled homeowners in our home state and across the 
country. I thank him for his hard work in creating this important 
legislation, and I am proud to support it.
  Now is the time to focus on solutions. Now is the time to take swift 
action to save 1.7 million homes otherwise expected to fall into 
foreclosure. The day will come when it is appropriate to assign blame, 
to call those responsible to task for the recklessness that led us 
here. But first we must act boldly to aid the victims of the mortgage 
crisis and stop the relentless march of foreclosures across America's 
heartland. I call upon my colleagues to pass the Durbin amendment 
without delay.
  Mr. DURBIN. I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The bill clerk proceeded to call the roll.
  Mr. DODD. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. DODD. Mr. President, I know that in a few minutes we are going to 
be voting on the amendment offered by our colleague from Illinois, 
Senator Durbin, and I wish to once again commend him and Senator 
Schumer and others who have been involved not just in the crafting of 
the amendment, but I wish to thank their staffs. Brad McConnell has 
done a Herculean job over these past number of weeks, including the 2-
week recess period we were out of session, to try to reach a compromise 
with major lending institutions and others across the country to be 
supportive of this proposal that Senator Durbin has asked us to 
approve, which is to allow judges under the bankruptcy law to work out 
modifications between lenders and borrowers with home mortgages that 
are involved in principal residences.
  Again, Senator Durbin has significantly shrunken his original idea to 
the point where this is a very modest proposal, for a very limited 
amount of time, affecting circumstances that would be very controlled 
due to the fears that were raised by others that this would be too 
broad and far-reaching. As to the point I attempted to make this 
morning, I am confounded by those who would oppose this amendment. 
Bankruptcy judges can engage in workouts between borrowers and lenders 
where vacation homes, holiday homes, recreational vehicles or yachts 
are involved, but they can't do it on a principal place of residence.
  I think that is a hard argument to explain to the American people, 
most of whom--while they might like to have a vacation or a holiday 
home or other residences--only have a principal place of residence, so 
they are restricted. What strikes them--and those of us who are 
supportive of the Durbin amendment--is how you explain to two families 
who live next door to each other, one of whom only has a principal 
place of residence, as most Americans do, and the next-door neighbor 
who, because of economic circumstances, inheritances or whatever else 
it may be, has that wonderful beach house or that cabin up in the 
mountains or that yacht on the lake, and if they are in trouble on 
those mortgages, the bankruptcy judge can work out a new financial 
arrangement which allows them to keep that vacation home or keep that 
boat or log cabin up in the hills. Yet the next-door neighbor, with 
just a principal place of residence, hears: I am sorry, you are going 
to foreclosure. We are not allowed to work that out for you.
  I don't know how you explain that to people, not to mention the 
damage you do, of course, to every other neighbor in that community 
whose property value declines because of the foreclosure, that family 
who is affected, neighborhood that is affected, economy that is 
affected.
  What the Senator from Illinois has proposed is a very narrow, 
restricted, commonsense idea. As I mentioned earlier, meeting with 
bankruptcy judges in Connecticut on Monday, I raised with them what 
they thought of the Durbin amendment. They thought it was a wonderful 
idea. I half expected they would say the courts are crowded, already 
overcrowded. That was not the argument at all.
  Again, I hope my colleagues, as they come to this Chamber, give this 
that additional consideration. This ought not be a matter that divides 
us here. This is one that could make some sense, even if it doesn't do 
as much as we hope it does. I mentioned earlier some 15,000 homes in my 
State could be positively affected by this amendment. What if it were 
only 5,000? What if we were off? Is it wrong to try to save 5,000 homes 
in my State? Or the 325,000, or a number like that, in California, not 
to mention States that have numbers that vastly exceed what Connecticut 
could benefit from?
  We will not know unless we try. All the things we have tried--and I 
have been involved with most of them--have never done quite as much as 
we hoped they would. But until we get to the bottom of the mortgage 
market problem, until you get to the bottom of that, all these other 
economic problems are going to be more difficult to solve.
  I applaud my colleague from Illinois. He has been tireless in his 
effort. I express my strong support for what he is trying to achieve 
here and hope my colleagues will do so as well in the few moments 
remaining before they come to cast a ballot on this important issue.
  You may never do anything that will allow for as much relief to as 
many families as you will if you cast a positive vote on the Durbin 
amendment. I would love to tell you these other ideas we are going to 
work on will have great opportunity, but I must tell you candidly, as 
the chairman of the Senate Banking Committee, this idea offers more 
hope for more people than any other idea you possibly ever will vote 
on.
  This is the moment, this is the hour, this is the day to make a 
difference and I know all my colleagues would like to make a difference 
for the people in their States who are going through job loss, home 
loss, retirement loss. Here is one answer that could very well provide 
the kind of relief all of us would like to see.
  I urge the adoption of the Durbin amendment.
  Mr. DURBIN. Mr. President, I ask for the yeas and nays on the 
amendment.
  The PRESIDING OFFICER. Is there a sufficient second?
  There is a sufficient second.
  The question is on agreeing to the amendment.
  The clerk will call the roll.
  The bill clerk called the roll.
  Mr. DURBIN. I announce that the Senator from Massachusetts (Mr. 
Kennedy) and the Senator from West Virginia (Mr. Rockefeller) are 
necessarily absent.

[[Page S4938]]

  Mr. KYL. The following Senator is necessarily absent: the Senator 
from Alabama (Mr. Sessions).
  The PRESIDING OFFICER (Mr. Udall of Colorado). Are there any other 
Senators in the Chamber desiring to vote?
  The result was announced--yeas 45, nays 51, as follows:

                      [Rollcall Vote No. 174 Leg.]

                                YEAS--45

     Akaka
     Bayh
     Begich
     Bingaman
     Boxer
     Brown
     Burris
     Cantwell
     Cardin
     Casey
     Conrad
     Dodd
     Durbin
     Feingold
     Feinstein
     Gillibrand
     Hagan
     Harkin
     Inouye
     Kaufman
     Kerry
     Klobuchar
     Kohl
     Lautenberg
     Leahy
     Levin
     Lieberman
     McCaskill
     Menendez
     Merkley
     Mikulski
     Murray
     Nelson (FL)
     Reed
     Reid
     Sanders
     Schumer
     Shaheen
     Stabenow
     Udall (CO)
     Udall (NM)
     Warner
     Webb
     Whitehouse
     Wyden

                                NAYS--51

     Alexander
     Barrasso
     Baucus
     Bennet
     Bennett
     Bond
     Brownback
     Bunning
     Burr
     Byrd
     Carper
     Chambliss
     Coburn
     Cochran
     Collins
     Corker
     Cornyn
     Crapo
     DeMint
     Dorgan
     Ensign
     Enzi
     Graham
     Grassley
     Gregg
     Hatch
     Hutchison
     Inhofe
     Isakson
     Johanns
     Johnson
     Kyl
     Landrieu
     Lincoln
     Lugar
     Martinez
     McCain
     McConnell
     Murkowski
     Nelson (NE)
     Pryor
     Risch
     Roberts
     Shelby
     Snowe
     Specter
     Tester
     Thune
     Vitter
     Voinovich
     Wicker

                             NOT VOTING--3

     Kennedy
     Rockefeller
     Sessions
  The PRESIDING OFFICER. Under the previous order requiring 60 votes 
for the adoption of the amendment, the amendment is withdrawn.
  The majority leader is recognized.
  Mr. REID. Mr. President, we are now going to proceed to the 
Strickland nomination. There should be a vote on that within the next 
couple of hours. We have a very important amendment that is going to be 
debated this evening, this afternoon, by Senators Dodd and Shelby. It 
is a substitute to the amendment that is now before the body. It is an 
extremely important amendment.
  I would hope if Senators have any other amendments they want offered 
to this bill that they should do it. We want to finish this legislation 
as quickly as we can. It is extremely important we get it done.
  We have 3 weeks left in this work period. There are things we have to 
complete this work period. We have to complete this housing 
legislation. I would like to do that in the next few days; hopefully, 
tomorrow. We are not going to have any votes tomorrow after 11 o'clock.
  Hopefully, we have all of the cards lined up. We can finish this 
housing legislation tomorrow. We are going to go to the credit card 
legislation as soon as we finish this housing legislation. We are going 
to go, after that, to the procurement legislation. That is a bipartisan 
piece of legislation with Senators Levin and McCain.
  Then, before we leave, we are going to do the supplemental 
appropriations bill. There is one other piece of work I wanted to do, 
but we--it doesn't appear that the HELP Committee is going to be able 
to have that marked up in time for me to do it. Frankly, we probably 
would not have time to do it anyway; that is, the FDA regulation of 
tobacco.
  So everyone needs to understand this is work we have to do before we 
leave. Then when we come back, the next work period is only 4 weeks. I 
have told Senator Kohl that we are going to do the railroad antitrust 
legislation during that 4-week work period. We are going to do that 
either the first or second week. Hopefully, no other emergencies come 
up that get in the way of not allowing us to do that.
  Also, because the budget passed yesterday, as soon as we get the 
302(b) allocations, which should be soon, we are going to move as 
quickly as we can to start working on the appropriations bills.
  There is a general feeling of the Democrats and Republicans that we 
want to be able to get some appropriations bills done.
  Senators Inouye and Cochran are two of the most valued Senators we 
have; they are experienced. They should be able to move us through 
them. So we pretty well understand what the workload is. The main 
question this afternoon is whether there are other amendments to be 
offered to the housing bill? During this period, we have a significant 
number of nominations that we will do our best to work out with the 
Republicans. We have done pretty well so far. We have quite a chunk 
still pending. We are concerned about David Hayes, Dawn Johnsen, and a 
number of others we have to see if we can work out a time agreement on.


                           Amendment No. 1018

              (Purpose: to provide a complete substitute)

  Mr. DODD. Mr. President, on behalf of Senator Shelby and myself, I 
call up amendment 1018 and ask for its consideration.
  The PRESIDING OFFICER. The clerk will report.
  The bill clerk read as follows:

       The Senator from Connecticut [Mr. Dodd], for himself and 
     Mr. Shelby, proposes an amendment numbered 1018.

  Mr. DODD. I ask unanimous consent that reading of the amendment be 
dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  (The amendment is printed in today's Record under ``Text of 
Amendments.'')
  Mr. DODD. I will wait until after the completion of the debate on the 
Strickland nomination to talk about the amendment. I am sure Senator 
Shelby will as well.

                          ____________________