[Congressional Record Volume 155, Number 67 (Monday, May 4, 2009)]
[Senate]
[Pages S5051-S5061]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




             HELPING FAMILIES SAVE THEIR HOMES ACT OF 2009

  The PRESIDING OFFICER. Under the previous order, the Senate will 
resume consideration of S. 896, which the clerk will report.
  The assistant legislative clerk read as follows:

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

  Pending:

       Dodd/Shelby amendment No. 1018, in the nature of a 
     substitute.
       Corker amendment No. 1019 (to amendment No. 1018), to 
     address safe harbor for certain servicers.

[[Page S5052]]

       Vitter amendment No. 1016 (to amendment No. 1018), to 
     authorize and remove impediments to the repayment of funds 
     received under the Troubled Asset Relief Program.
       Vitter amendment No. 1017 (to amendment No. 1018), to 
     provide that the primary and foundational responsibility of 
     the Federal Housing Administration shall be to safeguard and 
     preserve the solvency of the Administration.

  The PRESIDING OFFICER. The Senator from Connecticut is recognized.
  Mr. DODD. Mr. President, I am going to take a few minutes to explain. 
I know the leadership has already made these announcements, but as I 
have been told, at 5:30 there will be two votes on amendments offered 
by our colleague from Louisiana, Senator Vitter. I am going to take a 
few minutes here, once again, to review the underlying proposals 
Senator Shelby of Alabama and I have crafted as part of this bill. Then 
I will take a few minutes to express my views on the two Vitter 
amendments. I presume Senator Vitter himself may come over and talk 
about this or others who are interested in the two amendments may show 
up to express their interest in them as well.
  I thank the majority leader, Senator Reid, for scheduling the time 
for the consideration of this bill. Obviously, the importance of 
foreclosure mitigation is still critical. I still believe, as many do, 
that the root cause of our financial problems in this country began 
with the residential mortgage market, the predatory lending that went 
on with literally millions of people in this country. The Wall Street 
Journal reported that some 60 to 65 percent of people who were talked 
into predatory loans, subprime loans, actually qualified for 
conventional mortgages. Conventional mortgages are far less costly than 
subprime mortgages, but because there was a greater financial reward 
for brokers and others who were able to market and sell the subprime 
mortgages, they were marketed to people. Of course, those mortgages 
became far more costly. There were adjustable rate mortgages, there 
were teaser rates with almost no downpayments required and very little 
interest payments for months on end and then, of course, ballooning to 
the point that many people could ill-afford them. For many, they could 
not the afford them at all, to the point that problem migrated to other 
areas of our economy. As a result, today we find ourselves in a 
recession, and a deep one at that.
  This bill is designed to help families save their homes. That is what 
it is designed to do. There are a lot of provisions that relate to the 
smaller banks in the country and how we can be of some help to them to 
get credit moving.
  I did this last week at the close of business, but I thought I would 
spend a few minutes to review, once again, the major provisions of the 
bill without going into great detail as to what is included in each 
provision and then, as I said, address the two Vitter amendments that 
will be offered later this afternoon.
  This amendment we have offered is a substitute amendment that Senator 
Shelby and I have before us now, which is S. 896. It expands the number 
of tools available to try to prevent foreclosures and the ability of 
homeowners and loan servicers to use those tools. In addition, the bill 
includes provisions to make the banking system more stable and improve 
the availability of credit.
  Specifically, there are about 8 or 9 or 10 major provisions of the 
bill.
  The first of these provisions expands the ability of the Federal 
Housing Administration in rural housing to modify loans. I made the 
point last week that this is absolutely critical. FHA has been a savior 
in many cases, providing credit when credit has not been available 
elsewhere to keep a limited housing market open. It is very important 
that they have the tools to do that--certainly the tools to modify FHA 
or USDA loans, as they do for non-Government loans they service.
  This part of the bill is one that is critically important and can 
make a huge difference to people. There will be amendments offered to 
modify this provision of the bill. If we end up undermining the role of 
the FHA at this critical time, we can make it far more difficult for 
these foreclosures to be mitigated and decrease the possibility of 
people remaining in their homes.
  Second, it expands access to the HOPE for Homeowners legislation, 
which makes a number of changes to that bill we adopted last summer. It 
was a program that was well intended but left a lot of problems in 
terms of the effectiveness and efficiency of the legislation. This bill 
will allow for the option to lower fees and streamline the borrower 
certification requirements. We give the Secretary of the housing agency 
in our country limited discretion to determine the amount and 
distribution of future appreciation. We ban the very wealthiest in our 
country from being involved in this program. It was never intended to 
be such. We allow for incentive payments to servicers and originators 
who participate in the program. Again, it is something designed to be 
of help to the average citizens, working families in this country.
  Third, we create more enforcement tools for the FHA to eliminate bad 
lenders. This was an important provision that provides the tools to the 
housing and urban development agency to more expeditiously drop lenders 
that break FHA rules. This was needed to strengthen those provisions 
and make sure resources go to the areas that need them. They are 
certainly not to be used by lenders who are violating the rules of FHA.
  We then provide for a safe harbor for servicers who would either 
modify a loan consistent with the Obama foreclosure mitigation program 
or refinance the borrower into a HOPE for Homeowners loan. This has 
been a contentious issue between bankers and investors, trying to do 
something with regard to mitigation. This has been narrowly drawn.
  The House-passed bill--and I say this respectfully of the other 
body--had a broad provision in this area. This was an idea Senator 
Martinez offered a number of weeks ago. He has since modified this--and 
I agree with him--to try to restrict time, duration, and circumstances 
in which a safe harbor would apply.
  What is a safe harbor? A safe harbor is designed to encourage the 
servicers to modify loans, servicers who have had contracts with 
investors. The investors obviously are somewhat reluctant to watch a 
modification of any of these things that would deprive them of the 
ability to take legal action against a servicer who engaged in a 
modification creating a safe harbor for the servicer. We encourage 
them--it doesn't mandate but encourages them to modify those loans with 
the borrower, in the absence of which I doubt any servicer will be 
willing to step forward do so.
  So this is an absolutely critical area. While there are still 
concerns on the part of some, I believe it is the right step to be 
taking. It is limited in duration. It is limited to only the Obama 
foreclosure mitigation and the HOPE for Homeowners, only in those two 
instances, and therefore would not be as open and broad-based as 
provisions that have been adopted elsewhere.
  So I encourage my colleagues to be supportive. There will be an 
effort to change this in a way that I think would make it unworkable in 
terms of achieving the desired results here. Again, with 10,000 
foreclosures going on every single day in our country, we need to try 
to bring closure to that problem where we can. This is not going to 
solve every foreclosure, but it can certainly make a huge difference. 
An estimated 1.7 to 2 million foreclosures can be avoided with this 
kind of proposal in the bill.
  With the Obama proposals and HOPE for Homeowners proposals, we think 
that would make a significant difference, allow people to stay in their 
homes, and allow the lenders to get some payment back rather than the 
property falling into foreclosure.
  As the Presiding Officer knows, the contagion effect of a foreclosed 
property in a neighborhood is very daunting. We know for a fact that 
with one foreclosure in a neighborhood of a one-square-block area, the 
value of every other property in that square block declines by as much 
as $5,000 that very day. The last thing you want to see on your block, 
in your neighborhood, is foreclosed, boarded-up properties 
deteriorating. If you have a home there and that property is declining 
in value by the day, obviously everyone is adversely affected.
  So while I know this is a contentious issue for some, I am pleased 
that most

[[Page S5053]]

of the consumer groups, the realtors, the Financial Roundtable, and 
others strongly support the provisions Senator Shelby and I have in 
this bill when it comes to the issue of safe harbor. Again, I thank 
Senator Martinez, my colleague from Florida, for initiating the idea of 
this proposal.
  The next provision authorizes an additional $130 million for 
foreclosure prevention activities. Senator Reid is the author. I 
mentioned earlier that his support in creating the space and time for 
this bill to come up has been critically important but also the 
addition of this language which we now know is terribly effective.
  Earlier, Senator Schumer and others offered language to provide 
resources for the support of the prevention activities; that is, 
counseling activities. It proved very helpful. These can be complicated 
areas. To get into the issue of modifying a mortgage requires some good 
counseling. This is not a matter where the average person can just walk 
in and negotiate by themselves. I think having people who are 
experienced and knowledgeable, as we now have across the country, who 
can assist in this process, has been a great asset. These additional 
resources Senator Reid of Nevada has offered here will make a huge 
difference for people across our Nation, in addition to what has 
already been allocated.
  Then we have some provisions to increase the deposit insurance with 
the Federal Deposit Insurance Corporation from $100,000 to $250,000. I 
mentioned earlier how important that is to people to avoid the kinds of 
runs that can occur when fear grips investors and depositors. 
Certainly, those who have even a passing knowledge of history, of the 
Great Depression, know what happened when fear gripped the country and 
there were great runs on the banks, people running and taking their 
deposits out of the banks, feeling as though they were going to lose 
them, and the old notion of hiding it in your mattress was not a joke; 
people actually did that. They buried their hard-earned money on their 
property rather than keep it in what they perceived as an unsafe 
institution where they could lose those resources.
  So back in the 1930s, the FDIC was created to provide, among other 
things, an ability, when a bank is in trouble, to make that transition 
from a closed bank to one that could open so the people would not loose 
their resources, as well as providing insurance so that money would not 
be lost, a full guarantee of up to $100,000.
  The world has changed a lot since the 1980s, which is when I believe 
that provision, the $100,000, was added, over the last 29 or 30 years. 
Raising it to $250,000 we believed was necessary to assist, providing 
further guarantee and assistance as well.
  We increased borrowing authority in this bill for both the FDIC and 
the National Credit Union Administration, from $100 billion in the case 
of the FDIC and $6 billion for the National Credit Union 
Administration. There is additional authority that requires the 
approval of a two-thirds vote of the FDIC or National Credit Union 
Administration, a two-thirds vote of the Federal Reserve Board, and 
agreement by the Secretary of Treasury in consultation with the 
President of the United States.
  We stretch out the payment of assessments to rebuild bank thrift and 
credit union deposit insurance funds to 8 years. This was a very 
important provision; for many of our lending institutions, that period 
of assessment is absolutely essential. If it is too short, it obviously 
puts a huge financial burden on these institutions. I believe the 8 
years was a provision that was very important to these institutions and 
one that they are very pleased our legislation includes. I hope that 
will work as well as we intend it to.
  We also improve the FDIC systemic risk special assessment authority. 
Again, that is a real relief to institutions that would not participate 
in that program, that would have been assessed anyway. This provision 
of the bill protects them from that kind of assessment. Again, it is 
essentially important.
  That is a very quick review of the major provisions of the bill. As I 
mentioned earlier, this legislation enjoys broad-based support in our 
country, from major groups of people from major consumer groups in our 
Nation: The National Consumer Law Center, the Independent Community 
Bankers, the Center for Responsible Lending, along with the Housing 
Policy Council, the Financial Services Roundtable, the American Bankers 
Association. Rarely do I find these organizations coming together 
around a bill.
  You will normally have the consumer groups on one side and your 
financial services sector on the other side. That is normally how it 
works. But because of the effort made by so many people on our 
committee and elsewhere, we have put together a piece of legislation 
which we think will make a difference on foreclosure, provide some 
needed reform to our major financial institutions, provide counseling 
and additional support for people who seek that kind of help, as well 
as attract the kind of support from diverse institutions that watch and 
care very much about these groups.
  Last week I included letters of support. I should add as well that 
Lenders One, an association of mid-sized independent mortgage brokers, 
and the Mortgage Bankers Association, have endorsed what Senator Shelby 
and I have put together in this bill.
  That is a rough summary of the legislation. Of course, anybody who is 
interested in further information about this, we would welcome them to 
come over and discuss any provision they have interest in.
  Let me, at this point, if I can, address the two amendments which 
this body will consider at 5:30. The first one I will discuss is the 
amendment of Senator Vitter of Louisiana No. 1015.
  This amendment, as I understand it--obviously Senator Vitter will 
come and explain his own amendment. I hope I am accurately describing 
it. Under the Emergency Economic Stabilization Act, currently it 
requires the Treasury to permit a TARP recipient to repay the financial 
assistance it receives subject to consultation with the appropriate 
Federal banking agency. When the assistance is repaid, the recipient 
must also buy back the warrants it provided to the Treasury at the 
current market price.
  As I understand the Vitter amendment, it would require the Treasury 
to permit a TARP recipient to repay TARP assistance it received if the 
institution would be ``well capitalized'' after repaying the funds.
  Capitalization of our lending institutions is a critical component, 
as the Presiding Officer knows, very important, certainly essential, 
before one would even consider, again, having TARP money come back, the 
whole idea of insisting upon properly capitalized institutions.
  Under the amendment, Treasury could not condition the right of a TARP 
recipient to repay TARP on an agreement to also buy back the warrants. 
Under the current law, payback of the TARP money must be accompanied by 
the repurchase of those warrants.
  In fact, the amendment gives the TARP recipient the right to 
determine when the Treasury must buy back the warrants it received; the 
TARP recipient is not required to pay market price for them.
  I oppose the amendment and urge my colleagues to vote against it, I 
say respectfully of the author of the amendment, Senator Vitter, a 
member of our committee. I am concerned this amendment, if adopted, 
would further destabilize our financial system and could harm taxpayers 
who, of course, are the ones who put up the TARP money.
  Under this amendment, the Treasury would be forced to permit a bank 
that received TARP money to repay that assistance based on the sole 
criterion that the bank would remain well capitalized. Again, I 
emphasize that is an important consideration, but it is not the only 
one.
  If there is one lesson we have learned from this crisis, the 
definition for what ``well capitalized'' means is inadequate. For 
example, Citibank and Bank of America are well capitalized according to 
the standard in the amendment, and despite their obvious troubles, they 
would be able to return the TARP money they received. The standard the 
amendment would establish is simply ineffective and not comprehensive 
enough.
  Currently, the regulators can consider the bank's condition in a more 
complete, holistic way in assessing its

[[Page S5054]]

fitness to return TARP funds. The amendment would tie the hands of the 
regulators to this one particular factor, capital, a very important one 
but not the only one, a factor that has already proven to be faulty and 
insufficient to weather today's economic climate.
  To get out from under the executive compensation restrictions and 
other conditions imposed by Treasury, for example, institutions that 
are in a weakened condition may put themselves and the broader economy 
at risk. That is why this is important. If we are only talking about 
one institution, certainly getting the TARP money back is something we 
would all welcome. But I think we need to look at this beyond just what 
the effect is on that one institution but what is the effect of the 
overall financial system. That was the reason why these TARP dollars 
went out in the first place.
  So while being well capitalized is very important, if you limit it to 
that and that only and allow an institution, such as the ones I have 
mentioned, to then move beyond that, there could be put at risk the 
larger economy, which is, of course, the major goal here, to get the 
overall economy functioning and moving in the right direction.
  If banks were allowed to move in that direction merely on that basis 
alone, then I think we would regret that. Again, I think it is 
something we ought to be striving for, but this amendment is too 
narrow, in my view, to limit the decisions strictly on that one 
criterion. If lending is limited as a result of this amendment, that 
would mean more businesses closing for lack of financing, more job 
losses in our country, and a further weakening of the overall economy, 
delaying even further the recovery we all seek.
  It also would mean more foreclosures, which is at the heart of the 
bill. Foreclosed homes will stay on the market longer because people 
would not be able to get mortgages to buy these homes.
  As my colleagues know, the large banks have gone through the so-
called stress tests. Many of them, despite being designated as ``well-
capitalized,'' may still be forced to raise more capital, we are told.
  It strikes me as unwise that we want to tie Treasury's hands at this 
important time, right when the results of the stress tests are to be 
announced.
  The amendment would also harm the taxpayer by allowing the TARP 
recipient to decide when warrants may be exercised and by limiting the 
Treasury's ability to require the repurchase of warrants when TARP 
funds have been repaid.
  It also harms the taxpayer by eliminating the requirement that 
Treasury pay market price for the warrants and would allow banks to try 
to negotiate a better price, thereby reducing the returns to the 
taxpayers who put up the money in the first place.
  In conclusion, I would respectfully oppose this amendment. Current 
law already allows the banks to repay their TARP funding--in fact, we 
would encourage it--when it is the right time and safe to do so, 
examining an array of criteria, not just being well-capitalized. The 
quicker we can do that, the better off we are going to be. But it will 
be important that when some of these major institutions repay that, 
that in so doing they are not going to be jeopardizing the economy at 
large.

  The amendment, however, could cut credit availability at a time when 
credit is desperately needed; and could put more institutions at risk 
when stability is needed; and it is a bad deal, further, for the 
American taxpayer who, ultimately, is the one who put up the resources 
and hopes to get repaid when this economy begins to recover.
  Again, respectfully I say to my colleague and friend from Louisiana, 
I would oppose that amendment.
  The second amendment is No. 1017. This amendment deals with the 
Federal Housing Administration. The Vitter amendment would establish 
``solvency'' as the ``primary foundational responsibility'' of the 
Federal Housing Administration, the FHA.
  The amendment then requires the Secretary to close down any FHA 
program if it seems ``reasonably likely'' that the FHA might need 
credit subsidy from Congress. Again, I oppose this amendment because it 
does exactly the opposite of what we ought to be doing at a moment such 
as this.
  We thank our lucky stars that we have the FHA providing credit at 
this time. In exactly a moment such as this, you need the FHA out there 
to provide that credit when credit is so unavailable through the 
clogged-up financial system in our Nation. First and foremost, this 
amendment fails to reflect the fact that the primary mission of the 
Federal Housing Administration is to help create and sustain home 
ownership for American families.
  The mission of the FHA is especially important now, while we are 
struggling through such troubled economic times. FHA currently insures 
nearly 30 percent of the mortgage market in our Nation.
  If you extend the logic that the amendment proposes, you would shut 
the doors of Fannie Mae and Freddie Mac right now because both have had 
to draw on their credit lines from the Treasury. Without them, we would 
lose the other 70 percent of the mortgage market overnight, turning a 
housing recession into a deep housing depression.
  In my view, if it were not for the Federal Government at this hour, 
working through FHA and other federally supported institutions, there 
would be no mortgage credit available at all.
  The FHA has a mission. It is to ensure that adequate and affordable 
mortgage credit is available in every part of our Nation. It is 
currently fulfilling that mission admirably, while many other sources 
of credit, as I mentioned earlier, have totally disappeared or almost 
completely disappeared.
  The Federal Housing Administration pushes against the prevailing 
downward winds in our economy. It is countercyclical. The Senator's 
amendment would turn the FHA into a procyclical program, withdrawing 
credit, pulling it back, when credit is so difficult to come by. This 
change would help deepen the worst housing recession we are 
experiencing since the Great Depression.
  Moreover, I think it is important to know that FHA fund is not at 
risk. As of the second half of the fiscal year 2009, the sum of FHA's 
investments and cash on hand is nearly $32 billion. Its net position, 
assets minus liabilities, on March 31 of this year, was a positive 
$11.8 billion. Although FHA's capital has fallen to 3 percent, it is 
still 50 percent above its statutorily mandated level of 2 percent. 
Falling capital in tough times is to be expected. That is what is going 
on. We all understand that. That is what you have capital for, to 
protect yourself in the bad times.
  In addition, it is important to remember that FHA has always been a 
fixed-rate mortgage insurer. It never got involved in the exotic and 
often predatory practices offered by the subprime lenders. FHA has also 
required income to be documented and verified.
  In fact, because FHA has been known for its solid loan products, more 
and more people with better credit quality are using FHA today. Over 
the past 6 months, the average credit score in FHA has increased by 
nearly 40 points.
  Finally, current law already establishes a fiduciary duty ``to ensure 
that the Mutual Mortgage Insurance Fund remains financially sound.'' 
The Secretary is already required to make program changes or adjust 
premiums if FHA's performance is expected to differ substantially from 
the baseline established by an independent actuarial report.
  Secretary Donovan has assured me and the Congress that the Congress 
would be immediately alerted if he thought the FHA was at risk at all.
  In short, I ask my colleagues, again, I say this respectfully of its 
author, to oppose this amendment. It is not needed. It would be exactly 
the wrong message, the wrong action to be taking at this critical time. 
Solvency is not an insignificant issue, but the role of the FHA is not 
to provide solvency, necessarily, but it is to provide credit at a time 
when credit is not available.
  When as many people as I have indicated by the facts are relying on 
the FHA at a time when we are trying to encourage home ownership on 
responsible terms--and the FHA, as I pointed out earlier, was not one 
of these exotic lenders that was out there with these predatory 
practices. Quite the contrary. So rather than, in a sense, changing the 
mission of the FHA, fundamentally altering what its goal is

[[Page S5055]]

and ought to be at these times, we need to oppose this amendment.
  Again, we need to rely, as we can and must, on the fact that the FHA 
is in sound shape. If it is not for some reason, we have every reason 
to believe we can take improvement steps.
  Accordingly, again, I would urge our colleagues, when talking about 
both of these amendments, join me in opposing them, given the 
difficulty that both these amendments would raise if they were to be 
adopted.
  Again, I will be happy to be in the Chamber for the next hour or so. 
If people wish to come over and engage in a discussion or debate, I 
welcome that opportunity. But at 5:30, in a little more than an hour, 
we will have a vote on both these amendments of our colleague from 
Louisiana.
  Let me say, again, I think we assume this is personal in nature. It 
is not. I have respect for my colleague. We have a different point of 
view on matters. That is the nature of the institution and the debate 
that occurs.
  I don't question his motives or the sincerity behind his amendments, 
but I believe in both cases they would move us in the opposite 
direction from where we need to be going.
  With regard to TARP funding, all of us wish to get the TARP money 
back to the taxpayers as quickly as we can with interest. But we need 
to understand it is more than just capitalization when we make that 
decision. We don't want to do harm to our economy at a critical moment 
such as this. Secondly, with regard to FHA, solvency is important. The 
mission of FHA is, of course, to be countercyclical, not procyclical. 
At a critical time such as this, depriving them of that opportunity to 
fill a credit gap that does not exist today would be exactly the wrong 
message and do great damage to a critical component of home ownership.
  I yield the floor and suggest the absence of a quorum.
  The PRESIDING OFFICER (Mrs. Hagan). The clerk will call the roll.
  The bill clerk proceeded to call the roll.
  Mr. BOND. 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. BOND. Madam President, I rise today to offer some remarks on the 
Helping Families Save Their Homes Act of 2009.
  The housing foreclosure crisis continues to affect families and 
communities throughout the Nation. I appreciate the good efforts of 
Senators Dodd and Shelby and the Banking Committee for trying to tackle 
this crisis. Until we address these issues head-on and remove the toxic 
assets that have poisoned not only our financial system but the world's 
financial system, economic recovery will be difficult to achieve. 
President Obama himself said, when he addressed us in January, that all 
the other things happening are not going to get us out of the crisis we 
are in until we get the toxic assets out of the system.
  I particularly appreciate the fact that included in the bill is the 
Dodd-Crapo-Bond bill as an amendment which will strengthen the power of 
the Federal Deposit Insurance Corporation to go after institutions 
which are on the verge of failing. To me, that is the direction this 
administration and the previous administration should have been 
following but have not.
  But there are some troubling aspects of the Government's action in 
the FHA area, and I am concerned about the implications of some of the 
provisions in the bill before us. My biggest concern is the health and 
solvency of the Department of Housing and Urban Development's Federal 
Housing Administration, or FHA. I appreciate the work the managers have 
done to deal with the fraud issues. I also support Senator Vitter's 
efforts to raise this issue through an amendment he has offered. I 
think this amendment goes in the right direction. We might want to work 
on some of the language, but it gets at the problem.
  The bottom line is this: The FHA is a powder keg that could explode, 
leaving the taxpayers on the hook if Congress and the administration 
continue to overburden the Government agency. As I stated at a recent 
Transportation, Housing and Urban Development Appropriations 
Subcommittee hearing, the FHA's health and solvency are at high risk. 
The signs are troubling in many areas: FHA default rates are at their 
highest level in several years. FHA's economic value has fallen by 
almost 40 percent over the past year. FHA approval of new lenders has 
increased by 525 percent over the past 2 years, and there is evidence 
that some former subprime lenders and brokers have infiltrated FHA to 
conduct business. That in itself ought to be an alarm bell that goes 
off. Fraudulent activity in the mortgage industry has put and is at 
risk of exposing FHA to more risk. FHA has seen a significant increase 
in foreclosures, which endangers the stability of communities and 
neighboring homes. The rise in FHA defaults and foreclosures, 
especially in areas already victimized by subprime lending, threatens 
to make a bad problem worse. These troubling signs all point to a 
powder keg that is waiting to explode.
  What does this mean for taxpayers? It means, by law, FHA is required 
to carry a 2-percent reserve or a 50-to-1 leverage rate. If it falls 
below that statutory level, FHA must raise the premiums it charges to 
borrowers or Congress must appropriate funds. That means taxpayers 
footing more of the bill.
  I have a message for my colleagues in Congress and the 
administration: Americans do not want another bailout. The taxpayer 
credit card is maxed out.
  Luckily, HUD is currently being led by a very capable leader, HUD 
Secretary Shaun Donovan. However, he alone cannot fix the longstanding 
problems with HUD and FHA. The Congress and the administration must not 
make Secretary Donovan's job harder by placing more risk on FHA until 
the problems of the agency are fixed or the agency will crash.
  I read in today's Wall Street Journal an editorial, which I will ask 
to be printed in the Record, that says:

       In a rational world, Congress and the White House would 
     tighten FHA underwriting standards, in particular by 
     eliminating the 100% guarantee. That guarantee means banks 
     and mortgage lenders have no skin in the game; lenders 
     collect the 2% to 3% origination fees on as many FHA loans as 
     they can push out the door regardless of whether the borrower 
     has a likelihood of repaying the mortgage.

  Madam President, I ask unanimous consent to have this article printed 
in the Record following my remarks.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  (See exhibit 1.)
  Mr. BOND. Let me reemphasize, because this is important, if we 
continue to overburden FHA, this powder keg may explode.
  I thank my colleague, Senator Vitter, for highlighting the need to 
make protecting FHA solvency a priority--so taxpayers are not left on 
the hook. I ask my colleagues to support that amendment.
  Madam President, I yield the floor.

              [From the Wall Street Journal, May 4, 2009]

                               Exhibit 1

                         The Next Housing Bust

       Everyone knows how loose mortgage underwriting led to the 
     go-go days of multitrillion-dollar subprime lending. What 
     isn't well known is that a parallel subprime market has 
     emerged over the past year--all made possible by the Federal 
     Housing Administration. This also won't end happily for 
     taxpayers or the housing market.
       Last year banks issued $180 billion of new mortgages 
     insured by the FHA, which means they carry a 100% taxpayer 
     guarantee. Many of these have the same characteristics as 
     subprime loans: low downpayment requirements, high-risk 
     borrowers, and in many cases shady mortgage originators. FHA 
     now insures nearly one of every three new mortgages, up from 
     2% in 2006.
       The financial results so far are not as dire as those 
     created by the subprime frenzy of 2004-2007, but taxpayer 
     losses are mounting on its $562 billion portfolio. According 
     to Mortgage Bankers Association data, more than one in eight 
     FHA loans, is now delinquent--nearly triple the rate on 
     conventional, nonsubprime loan portfolios. Another 7.5% of 
     recent FHA loans are in ``serious delinquency,'' which means 
     at least three months overdue.
       The FHA is almost certainly going to need a taxpayer 
     bailout in the months ahead. The only debate is how Much it 
     will cost. By law FHA must carry a 2% reserve (or a 50 to l 
     leverage rate), and it is now 3% and falling. Some experts 
     see bailout costs from $50 billion to $100 billion or more, 
     depending on how long the recession lasts.
       How did this happen? The FHA was created during the 
     Depression to help moderate-income and first time homebuyers 
     obtain a mortgage. However, as subprime lending took off, 
     banks fled from the FHA and its business fell by almost 80%. 
     Under the Bush

[[Page S5056]]

     Administration, the FHA then began a bizarre initiative to 
     ``regain its market share.'' And beginning in 2007, the Bush 
     FHA, Congress, the homebuilders and Realtors teamed up to 
     expand the agency's role.
       The bill that passed last summer more than doubled the 
     maximum loan amount that FHA can insure--to $719,000 from 
     $362,500 in high-priced markets. Congress evidently believes 
     that a moderate-income buyer can afford a $700,000 house. 
     This increase in the loan amount was supposed to boost the 
     housing market as subprime crashed and demand for homes 
     plummeted. But FHA's expansion has hardly arrested the 
     housing market decline. The higher FHA loan ceiling was also 
     supposed to be tempor- rary, but this year Congress made it 
     permanent.
       Even more foolish has been the campaign to lower FHA 
     downpayment requirements. When FHA opened in the 1930s, the 
     downpayment minimum was 20%; it fell to 10% in the 1960s, and 
     then 3% in 1978. Last year the Senate wisely insisted on 
     raising the downpayment to 3.5%, but that is still far too 
     low to reduce delinquencies in a falling market.
       Because FHA also allows borrowers to finance closing costs 
     and other fees as part of the mortgage, the purchaser's 
     equity can be very close to zero. With even a small drop in 
     prices, many homeowners soon have mortgages larger than their 
     home's value--which is one reason FHA's defaults are rising. 
     Every study shows that by far the best way to reduce defaults 
     and foreclosures is to increase downpayments. Banks know this 
     and have returned to a 10% minimum downpayment on their non-
     FHA loans.
       In a rational world, Congress and the White House would 
     tighten FHA underwriting standards, in particular by 
     eliminating the 100% guarantee. That guarantee means banks 
     and mortgage lenders have no skin in the game; lenders 
     collect the 2% to 3% origination fees on as many FHA loans as 
     they can push out the door regardless of whether the borrower 
     has a likelihood of repaying the mortgage. The Washington 
     Post reported in March a near-tripling in the past year in 
     the number of loans in which a borrower failed to make more 
     than a single payment. One Florida bank, Great Country 
     Mortgage of Coral Gables, had a 64% default rate on its FHA 
     properties.
       The Veterans Affairs housing program has a default rate 
     about half that of FHA loans, mainly because the VA provides 
     only a 50% maximum guarantee. If banks won't take half the 
     risk of nonpayment, this is a market test that the loan 
     shouldn't be made.
       These reforms have long been blocked by the powerful 
     housing lobby--Realtors, homebuilders and mortgage bankers, 
     backed by their friends in Congress. They claim FHA makes 
     money for taxpayers through the premiums it collects from 
     homebuyers. But keep in mind these are the same folks who 
     said taxpayers weren't at risk with Fannie Mae and Freddie 
     Mac.
       A major lesson of Fan and Fred and the subprime fiasco is 
     that no one benefits when we push families into homes they 
     can't afford. Yet that's what Congress is doing once again as 
     it relentlessly expands FHA lending with minimal oversight or 
     taxpayer safeguards.

  The PRESIDING OFFICER. The Senator from Ohio.
  Mr. BROWN. Madam President, I applaud the work of Chairman Dodd on 
this issue, as on so many others--fighting the terrible problems of 
credit card abuse, dealing with the home foreclosure mess--and thank 
him for his work.
  (The remarks of Mr. Brown are printed in today's Record under 
``Morning Business.'')
  The PRESIDING OFFICER. The Senator from Connecticut.


          Amendments Nos. 1020 and 1021 to Amendment No. 1018

  Mr. DODD. Madam President, I know this may confuse some people. I am 
going to call up a couple amendments for my colleague from Iowa, 
Senator Grassley. He cannot be here.
  I ask unanimous consent to temporarily set aside the pending 
amendments and call up amendments Nos. 1020 and 1021 on behalf of the 
Senator from Iowa, Mr. Grassley.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The clerk will report.
  The bill clerk read as follows:

       The Senator from Connecticut [Mr. Dodd], for Mr. Grassley, 
     for himself, Mr. Baucus, and Ms. Snowe, proposes an amendment 
     numbered 1020.
       The Senator from Connecticut [Mr. Dodd], for Mr. Grassley, 
     proposes an amendment numbered 1021.

  The amendments are as follows:


                Amendment No. 1020 to Amendment No. 1018

(Purpose: To enhance the oversight authority of the Comptroller General 
 of the United States with respect to expenditures under the Troubled 
                         Asset Relief Program)

       At the end of the bill, add the following:

    TITLE V--ENHANCED OVERSIGHT OF THE TROUBLED ASSET RELIEF PROGRAM

     SEC. 501. ENHANCED OVERSIGHT OF THE TROUBLED ASSET RELIEF 
                   PROGRAM.

       Section 116 of the Emergency Economic Stabilization Act of 
     2008 (12 U.S.C. 5226) is amended--
       (1) in subsection (a)(1)(A)--
       (A) in clause (iii), by striking ``and'' at the end;
       (B) in clause (iv), by striking the period at the end and 
     inserting ``; and''; and
       (C) by adding at the end the following:
       ``(v) public accountability for the exercise of such 
     authority, including with respect to actions taken by those 
     entities participating in programs established under this 
     Act.''; and
       (2) in subsection (a)(2)--
       (A) by redesignating subparagraph (C) as subparagraph (E); 
     and
       (B) by striking subparagraph (B) and inserting the 
     following:
       ``(B) Access to records.--
       ``(i) In general.--Notwithstanding any other provision of 
     law, and for purposes of reviewing the performance of the 
     TARP, the Comptroller General shall have access, upon 
     request, to any information, data, schedules, books, 
     accounts, financial records, reports, files, electronic 
     communications, or other papers, things, or property 
     belonging to or in use by the TARP, any entity established by 
     the Secretary under this Act, or any entity participating in 
     a program established under the authority of this Act, and to 
     the officers, employees, directors, independent public 
     accountants, financial advisors and any and all other agents 
     and representatives thereof, at such time as the Comptroller 
     General may request.
       ``(ii) Verification.--The Comptroller General shall be 
     afforded full facilities for verifying transactions with the 
     balances or securities held by, among others, depositories, 
     fiscal agents, and custodians.
       ``(iii) Copies.--The Comptroller General may make and 
     retain copies of such books, accounts, and other records as 
     the Comptroller General deems appropriate.
       ``(C) Agreement by entities.--Each contract, term sheet, or 
     other agreement between the Secretary or the TARP (or any 
     TARP vehicle, officer, director, employee, independent public 
     accountant, financial advisor, or other TARP agent or 
     representative) and an entity participating in a program 
     established under this Act shall provide for access by the 
     Comptroller General in accordance with this section.
       ``(D) Restriction on public disclosure.--
       ``(i) In general.--The Comptroller General may not publicly 
     disclose proprietary or trade secret information obtained 
     under this section.
       ``(ii) Exception for congressional committees.--This 
     subparagraph does not limit disclosures to congressional 
     committees or members thereof having jurisdiction over any 
     private or public entity participating in a program 
     established under this Act.
       ``(iii) Rule of construction.--Nothing in this section 
     shall be construed to alter or amend the prohibitions against 
     the disclosure of trade secrets or other information 
     prohibited by section 1905 of title 18, United States Code, 
     or other applicable provisions of law.''.


                Amendment No. 1021 to Amendment No. 1018

   (Purpose: To amend chapter 7 of title 31, United States Code, to 
 provide the Comptroller General additional audit authorities relating 
to the Board of Governors of the Federal Reserve System, and for other 
                               purposes)

       At the appropriate place insert the following:

       TITLE__--COMPTROLLER GENERAL ADDITIONAL AUDIT AUTHORITIES

     SEC. ___. COMPTROLLER GENERAL ADDITIONAL AUDIT AUTHORITIES.

       (a) Definition of Agency.--Section 714(a) of title 31, 
     United States Code, is amended by striking ``Federal Reserve 
     Board,'' and inserting ``Board of Governors of the Federal 
     Reserve System (in this section referred to as the `Board'), 
     the Federal Open Market Committee, the Federal Advisory 
     Council,''.
       (b) Audits of the Board of Governors of the Federal Reserve 
     System and the Federal Reserve Banks.--Section 714(b) of 
     title 31, United States Code, is amended by striking the 
     second sentence.
       (c) Confidential Information.--Section 714(c) of title 31, 
     United States Code, is amended--
       (1) by redesignating paragraphs (2) and (3) as paragraphs 
     (3) and (4), respectively; and
       (2) by inserting after paragraph (1) the following:
       ``(2)(A) Except as provided under paragraph (4), an officer 
     or employee of the Government Accountability Office may not 
     provide to any person outside the Government Accountability 
     Office any document or name described under subparagraph (B) 
     if that document or name is maintained as confidential by the 
     Board, the Federal Open Market Committee, the Federal 
     Advisory Council, or any Federal reserve bank.
       ``(B) The documents and names referred to under 
     subparagraph (A) are--
       ``(i) any document relating to--
       ``(I) transactions for or with a foreign central bank, 
     government of a foreign country, or nonprivate international 
     financing organization;
       ``(II) deliberations, decisions, or actions on monetary 
     policy matters, including discount window operations, 
     reserves of member banks, securities credit, interest on 
     deposits, and open market operations; or
       ``(III) transactions made under the direction of the 
     Federal Open Market Committee; or

[[Page S5057]]

       ``(ii) the name of any foreign central bank, government of 
     a foreign country, or non-private international financing 
     organization associated with a transaction described under 
     clause (i)(I).''; and
       (3) by striking paragraph (4) (as redesignated by this 
     subsection) and inserting the following:
       ``(4) This subsection shall not--
       ``(A) authorize an officer or employee of an agency to 
     withhold information from any committee or subcommittee of 
     jurisdiction of Congress, or any member of such committee or 
     subcommittee; or
       ``(B) limit any disclosure by the Government Accountability 
     Office to any committee or subcommittee of jurisdiction of 
     Congress, or any member of such committee or subcommittee.''.
       (d) Access to Records.--
       (1) Access to records.--Section 714(d)(1) of title 31, 
     United States Code, is amended--
       (A) in the first sentence, by inserting ``or any entity 
     established by an agency'' after ``an agency''; and
       (B) by inserting ``The Comptroller General shall have 
     access to the officers, employees, contractors, and other 
     agents and representatives of an agency or any entity 
     established by an agency at any reasonable time as the 
     Comptroller General may request. The Comptroller General may 
     make and retain copies of such books, accounts, and other 
     records as the Comptroller General determines appropriate.'' 
     after the first sentence.
       (2) Unauthorized access.--Section 714(d)(2) of title 31, 
     United States Code, is amended by inserting ``, copies of any 
     record,'' after ``records''.
       (e) Availability of Draft Reports for Comment.--Section 
     718(a) of title 31, United States Code, is amended by 
     striking ``Federal Reserve Board,'' and inserting ``Board of 
     Governors of the Federal Reserve System, the Federal Open 
     Market Committee, the Federal Advisory Council,''.

  Mr. DODD. Madam President, let me just say that my offering these 
amendments should not necessarily indicate we have reached an agreement 
on these amendments. Senator Grassley's staff and our staff are working 
together to see if we can achieve an agreement on them. We hope we do. 
But certainly he has the right to raise those amendments, and I was 
more than happy to offer them on his behalf.
  With that, 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. VITTER. Madam President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.


                     Amendments Nos. 1016 and 1017

  Under the previous order, the time until 5:30 shall be equally 
divided prior to a vote in relation to amendments Nos. 1016 and 1017 
offered by the Senator from Louisiana, Mr. Vitter.
  The Senator from Louisiana is recognized.
  Mr. VITTER. Madam President, I rise to again present my amendments 
coming up for a vote, Nos. 1016 and 1017. I have spoken before on this 
floor about them, but I want to summarize briefly.
  Amendment No. 1016 is very simple and straightforward, but it is very 
important as well. It says any bank that has accepted taxpayer TARP 
dollars can repay those dollars, with interest, and get out of the 
program whenever it wants, as long as it meets all of the safety and 
soundness criteria, and all the capitalization and liquidity criteria 
that all of the regulators who regulate that bank have on them. Again, 
this is a very basic but important idea.
  The TARP program was designed to stabilize shaky banks. So if a bank 
wants to give back the money, with interest, as long as it meets all of 
the safety and soundness criteria--every one in sight--it should be 
able to do that.
  You would think this would be beyond debate. Unfortunately, it is not 
and, unfortunately, several folks, starting with the Secretary of the 
Treasury, Timothy Geithner, are refusing to let this happen. In fact, 
Secretary Geithner has been very clear that this isn't simply up to 
those banks; it is up to their new senior partner, the Federal 
Government. It is sort of like when the mob comes in as your partner in 
a business; you lose complete control and you cannot decide that it is 
not time for them to buy you out. After that happens, no, no, no, it is 
no longer your decision.
  As the Wall Street Journal recently reported, with regard to an 
interview with the Secretary, he indicated that the ``health of 
individual banks won't be the sole criteria for whether financial firms 
will be allowed to repay bailout funds.''
  What a great, brave, new world we now live in, where individual 
private institutions cannot set their own course, cannot decide their 
own destiny, and cannot even give back taxpayer dollars to benefit the 
taxpayer, benefit the Treasury, with interest, as long as they meet all 
of the safety and soundness and capitalization and liquidity 
requirements in sight.
  There is also a provision in my amendment that says Treasury cannot 
force repayment buyback of the warrants at a price they name. That is 
completely noncontroversial, since a distinguished member of the 
majority, Senator Jack Reed of Rhode Island, is proposing precisely my 
same language with regard to warrants. This is an important issue 
regarding our free market system and whether we are going to allow it 
to get back to a private firm-based free market system.
  I urge my colleagues to support this amendment.
  Second is my amendment No. 1017. This amendment has to do with the 
Federal Housing Administration. It simply focuses like a laser beam on 
the importance of preserving and protecting the fundamental solvency of 
the FHA. This amendment requires that the first duty of the FHA is to 
maintain that solvency. It says if the provisions of this underlying 
bill, or any other existing requirement, cause the FHA to be reasonably 
likely to need a bailout from Congress--which a lot of folks think is 
imminent--then the Commissioner shall temporarily suspend that program 
which is causing a need for a bailout and recommend legislation to 
Congress to fix the situation.
  Many observers, including the Wall Street Journal, think it is a 
virtual certainty that we are headed toward a crippling blow to the FHA 
needing a bailout from Congress. Rather than rush there and heap more 
burdens and more requirements and more need for more money on the FHA, 
which this underlying bill does, perhaps we should put in place some 
basic protections to the solvency of the FHA. That is what my amendment 
does very clearly.
  With that, I reserve the remainder of my time.
  The PRESIDING OFFICER. Who yields time?
  The Senator from Connecticut is recognized.
  Mr. DODD. Madam President, I see my friend from Louisiana is here. I 
spoke earlier about my colleague's two amendments. I appreciate the 
spirit and motivation behind them. I will take a couple of minutes to 
review my concern about them.
  First, regarding Senator Vitter's first amendment, No. 1016, dealing 
with TARP money, I think we all would like money coming back sooner 
rather than later--getting to a point where these resources come back, 
with additional interest, to the extent that taxpayers can be made 
whole as a result of coming up with that money in the first instance 
and trying to bring stability to the financial markets. There is no 
debate about that. We agree about that.
  There was significant debate that occurred about whether there should 
be TARP money to begin with. It wasn't all one way. I supported it. I 
thought it made sense to try to stabilize our economy. I believe most 
believe that the decision made last September, early October, was the 
right one. In fact, had we not done that, we probably would have lost 
major lending institutions in the country over many months. Obviously, 
this administration inherited a good part of the problem, which didn't 
begin overnight, and it is trying to grapple with it in a holistic 
fashion, institution by institution.
  My concern with the amendment of my friend from Louisiana is this: He 
is absolutely correct that, again, if we have an institution that is 
well capitalized, that is a very important criteria in consideration of 
when these TARP moneys ought to be repaid. My concern is it is not the 
only criteria. We have major lending institutions, which I could make a 
case both in Citi and Bank of America, that are well capitalized but, 
frankly, they have other issues they are grappling with beyond being 
well capitalized.
  If that was the sole criterion, then we would be able to have the 
TARP money come back. Citi may want to do that, and Bank of America--
and I am not suggesting they do, but they may--

[[Page S5058]]

their problems could migrate very quickly to the larger financial 
problems with which we are trying to deal.
  On the one hand, I agree with the motivation, and that is we ought to 
try to get to the bottom of this as quickly as we can, get the TARP 
moneys back so the Treasury is replenished with these resources. On the 
other hand, if we do so prematurely solely on the basis of being well 
capitalized, we can end up compounding a problem that is already 
serious and making it far worse.
  For that reason, I urge this amendment be rejected. I say that 
respectfully to my colleague. I don't like getting up and opposing 
amendments for the simple reason of opposing them. There is a 
difference here, to have one criteria on which we would depend solely 
on the determination of returning these dollars, putting the larger 
issues at risk, I think would not be the right move to make at this 
point. Therefore, at the appropriate time I will ask for the amendment 
to be rejected.
  Regarding FHA--and, again, I find myself in the awkward position of 
not disagreeing with my colleague. Solvency is obviously an important 
issue. Had the rest of the lending institutions in the country been as 
prudent as FHA, we wouldn't be here talking about this larger problem.
  FHA never engaged in the exotic instruments that many others did in 
the subprime markets with teaser rates and no-doc loans, as they were 
called, or liar loans. FHA has been a well-run, prudent operation. 
Today, when very little credit is available for home mortgages, FHA is 
proving to be vitally important. Thirty percent of the mortgage market 
today is made up of FHA. If the goal of FHA is strictly the solvency of 
it--today it is 50 percent above statutorily what it is required to 
have on a cap of 2 percent, at 3 percent, less than 6 they had a while 
ago. Obviously, we have to keep an eye on this. But the law statutorily 
requires the Secretary of the Treasury to notify the Congress when, in 
fact, there is danger of FHA falling either at or below that 2-percent 
requirement.
  Again, solvency is not insignificant. If that becomes the criteria at 
a time when we need to be getting more credit out so we begin to get 
the housing market moving again, I think it is absolutely essential. If 
FHA is forced to close down just as it is needed most, making it 
procyclical not countercyclical--which is exactly what we need to be is 
countercyclical, not procyclical--then we would be turning the 
recession in the housing area into a depression, which none of us want 
to see happen.
  At this hour, it is very important that we keep FHA moving in that 
direction, watching, obviously, as my colleague from Louisiana suggests 
by his amendment, that solvency not be disregarded.
  Current statute already requires the Secretary to adjust programs 
that ensure FHA remains financially sound. In fact, like all housing-
focused activities, FHA has lost money in this crisis, but it still has 
more capital than the law requires, and the quality of its borrowers is 
improving as we speak. That is to be applauded.
  At this very moment, were we to move away from FHA when so much of 
our housing market depends upon them, I think would be a step in the 
wrong direction. For that reason, I respectfully ask our colleagues to 
oppose this amendment. Again, I find myself in the awkward position of 
not disagreeing with what my colleague talks about in the case of both 
amendments; that is, getting TARP money back as soon as we can and that 
solvency is a critically important function at FHA. That is why the 
statute was written the way it was. I agree with him on those points. I 
am just concerned if in the first case we set a sole criteria of being 
well capitalized, and in the case of FHA if solvency is the only value, 
then we lose the value of FHA at a time when housing is having a hard 
time finding available credit.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Louisiana.
  Mr. VITTER. Madam President, I appreciate the kind comments of my 
colleague. I note that he never disagrees with me, although, 
unfortunately, he always opposes my amendments. We will work through 
that.
  I have a few closing comments. First of all, with regard to my first 
amendment allowing banks to repay the TARP money as long as they are 
sound and secure, I note that the U.S. Chamber of Commerce strongly 
supports this amendment. I have a letter from the Chamber.
  I ask unanimous consent to have printed in the Record the letter from 
the Chamber of Commerce.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                               Chamber of Commerce


                              of the United States of America,

                                      Washington, DC, May 4, 2009.
       To the Members of the United States Senate: The U.S. 
     Chamber of Commerce, the world's largest business federation 
     representing more than three million businesses and 
     organizations of every size, sector, and region, supports 
     Vitter Amendment #1 to S. 896, the ``Helping Families Save 
     Their Homes Act of 2009.'' This amendment would remove 
     impediments to the repayment of funds received under the 
     Troubled Asset Relief Program (TARP).
       The Chamber supported the passage of the Emergency Economic 
     Stabilization Act (EESA) and the creation of the TARP 
     program. Inadequate credit markets blocked the life blood of 
     the economy forcing thousands of businesses to close and 
     millions of people to lose their jobs. The EESA allows the 
     federal government to undertake temporary measures to 
     stabilize the financial services sector and restore fully 
     functioning credit markets. To bolster the effectiveness of 
     TARP, the Treasury Department requested that otherwise 
     healthy firms enter the program. Those firms have since 
     complied.
       While the success and administration of TARP has been hotly 
     debated, the program was always envisioned as a temporary 
     measure. Last week, House Financial Services Committee Chair 
     Barney Frank was quoted in reports that he envisioned the 
     banking sector being TARP-free within a year and that ``it 
     would be good for public confidence'' if banks repay TARP 
     funds. Nevertheless, published reports have stated that 
     impediments may exist, or would be put in place, to make the 
     repayment of TARP funds problematic at best.
       The Vitter Amendment would remove any impediments to 
     repaying TARP funds. The repayment of TARP funds is an 
     important element in restoring confidence in the financial 
     services sector and a vital and necessary step on the road to 
     economic recovery.
       Accordingly, the Chamber urges you to support Vitter 
     Amendment #1 to S. 896.
           Sincerely,

                                              R. Bruce Josten,

                                         Executive Vice President,
                                               Government Affairs.

  Mr. VITTER. Madam President, I also note a particular line in that 
letter, which is an excellent point, which is that the repayment of 
these moneys from TARP banks will actually be an enormously positive 
confidence-inspiring turn of events, and I think it will do a lot to 
shore up concern regarding financial institutions that will be 
correctly perceived as movement in the right direction.
  With regard to my second amendment regarding the FHA, I will just 
note a couple of things. First of all, my amendment does not propose in 
any way shutting down the FHA under any circumstances. What it says is, 
if the FHA thinks it is headed toward insolvency, it is going to stop 
these new mandates on it, these new programs which are pushing it 
toward insolvency and, at the same time, immediately report to Congress 
about how we deal with that situation.
  Unfortunately, I don't think it is a very well kept secret that this 
is a grave threat for the FHA to start walking down the path of Fannie 
and Freddie and everyone else.
  Again, the Wall Street Journal wrote in their very prescient article, 
``The Next Housing Bust,'' predicting exactly that. There are very many 
tell-tale signs on the horizon:

       According to Mortgage Bankers Association data, more than 
     one in eight FHA loans is now delinquent, nearly triple the 
     rate of conventional non-subprime loan portfolios. Another 
     7.5 percent of recent FHA loans are in serious delinquency, 
     which means at least 3 months overdue. The FHA is almost 
     certainly going to need a taxpayer bailout in the months 
     ahead.

  Let's try to head this off before another collapse, another rattling 
of the system is upon us and keep the FHA solvent rather than having it 
shaken, having public confidence rattled once again and having Congress 
have to act in a complete emergency atmosphere. My amendment would head 
that off in an effective way.
  Madam President, I reserve the remainder of my time to the extent I 
have any.
  The PRESIDING OFFICER. The Senator from Connecticut.
  Mr. DODD. Madam President, I wish to add regarding the FHA amendment,

[[Page S5059]]

for my colleague's information, joining me in opposing the amendment 
are the mortgage bankers, homebuilders, realtors, Lenders One--the 
people very involved in the residential mortgage market. I note they 
expressed a concern about the amendment.
  I suggest the absence of a quorum.
  The PRESIDING OFFICER. Without objection, the clerk will call the 
roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. DODD. Madam President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Under the previous order, there will now be 2 minutes of debate, 
equally divided, prior to a vote on amendment No. 1016, offered by the 
Senator from Louisiana, Mr. Vitter.
  Mr. DODD. Madam President, I think we are both prepared to waive that 
time. We have talked enough about the amendments, so I am prepared to 
waive that time and go right to the vote.
  The PRESIDING OFFICER. If all time is yielded back, the question is 
on agreeing to amendment No. 1016.
  Mr. VITTER. Madam President, I ask for the yeas and nays.
  The PRESIDING OFFICER. Is there a sufficient second?
  There appears to be.
  The clerk will call the roll.
  The assistant legislative clerk called the roll.
  Mr. DURBIN. I announce that the Senator for South Dakota (Mr. 
Johnson), the Senator from Massachusetts (Mr. Kennedy), the Senator 
from West Virginia (Mr. Rockefeller), and the Senator from New 
Hampshire (Mrs. Shaheen) are necessarily absent.
  Mr. KYL. The following Senators are necessarily absent: the Senator 
from Oklahoma (Mr. Coburn), the Senator from Florida (Mr. Martinez), 
and the Senator from Arizona (Mr. McCain).
  The PRESIDING OFFICER. Are there any other Senators in the Chamber 
desiring to vote?
  The result was announced--yeas 39, nays 53, as follows:

                      [Rollcall Vote No. 176 Leg.]

                                YEAS--39

     Barrasso
     Bayh
     Bennett
     Bond
     Brownback
     Bunning
     Burr
     Chambliss
     Cochran
     Collins
     Cornyn
     Crapo
     DeMint
     Dorgan
     Ensign
     Enzi
     Graham
     Grassley
     Hatch
     Hutchison
     Inhofe
     Isakson
     Johanns
     Kohl
     Kyl
     Lincoln
     McConnell
     Murkowski
     Nelson (NE)
     Risch
     Roberts
     Sessions
     Shelby
     Snowe
     Thune
     Vitter
     Voinovich
     Webb
     Wicker

                                NAYS--53

     Akaka
     Alexander
     Baucus
     Begich
     Bennet
     Bingaman
     Boxer
     Brown
     Burris
     Byrd
     Cantwell
     Cardin
     Carper
     Casey
     Conrad
     Corker
     Dodd
     Durbin
     Feingold
     Feinstein
     Gillibrand
     Gregg
     Hagan
     Harkin
     Inouye
     Kaufman
     Kerry
     Klobuchar
     Landrieu
     Lautenberg
     Leahy
     Levin
     Lieberman
     Lugar
     McCaskill
     Menendez
     Merkley
     Mikulski
     Murray
     Nelson (FL)
     Pryor
     Reed
     Reid
     Sanders
     Schumer
     Specter
     Stabenow
     Tester
     Udall (CO)
     Udall (NM)
     Warner
     Whitehouse
     Wyden

                             NOT VOTING--7

     Coburn
     Johnson
     Kennedy
     Martinez
     McCain
     Rockefeller
     Shaheen
  The amendment (No. 1016) was rejected.
  Mr. DODD. Madam President, I move to reconsider the vote, and I move 
to lay that motion on the table.
  The motion to lay on the table was agreed to.
  The PRESIDING OFFICER. Under the previous order, there will now be 2 
minutes of debate equally divided prior to a vote on amendment No. 
1017, offered by the Senator from Louisiana, Mr. Vitter.
  The Senator from Connecticut is recognized.
  Mr. DODD. Madam President, I believe Senator Vitter and I are 
prepared to waive the 2 minutes equally divided.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The question is on agreeing to amendment No. 1017.
  Mr. DODD. Does my colleague want a recorded vote?
  Mr. VITTER. I ask for the yeas and nays.
  The PRESIDING OFFICER. Is there a sufficient second? There is a 
sufficient second.
  The clerk will call the roll.
  Mr. DURBIN. I announce that the Senator from South Dakota (Mr. 
Johnson), the Senator from Massachusetts (Mr. Kennedy), the Senator 
from West Virginia (Mr. Rockefeller), and the Senator from New 
Hampshire (Mrs. Shaheen) are necessarily absent.
  Mr. KYL. The following Senators are necessarily absent: the Senator 
from Florida (Mr. Martinez), the Senator from Arizona (Mr. McCain), and 
the Senator from Oklahoma (Mr. Coburn).
  The PRESIDING OFFICER (Mr. Begich). Are there any other Senators in 
the Chamber desiring to vote?
  The result was announced--yeas 36, nays 56, as follows:

                      [Rollcall Vote No. 177 Leg.]

                                YEAS--36

     Alexander
     Barrasso
     Bennett
     Bond
     Brownback
     Bunning
     Burr
     Chambliss
     Cochran
     Collins
     Corker
     Cornyn
     Crapo
     DeMint
     Ensign
     Enzi
     Graham
     Grassley
     Gregg
     Hatch
     Hutchison
     Inhofe
     Isakson
     Johanns
     Kyl
     Lugar
     McConnell
     Murkowski
     Risch
     Roberts
     Sessions
     Shelby
     Snowe
     Thune
     Vitter
     Wicker

                                NAYS--56

     Akaka
     Baucus
     Bayh
     Begich
     Bennet
     Bingaman
     Boxer
     Brown
     Burris
     Byrd
     Cantwell
     Cardin
     Carper
     Casey
     Conrad
     Dodd
     Dorgan
     Durbin
     Feingold
     Feinstein
     Gillibrand
     Hagan
     Harkin
     Inouye
     Kaufman
     Kerry
     Klobuchar
     Kohl
     Landrieu
     Lautenberg
     Leahy
     Levin
     Lieberman
     Lincoln
     McCaskill
     Menendez
     Merkley
     Mikulski
     Murray
     Nelson (NE)
     Nelson (FL)
     Pryor
     Reed
     Reid
     Sanders
     Schumer
     Specter
     Stabenow
     Tester
     Udall (CO)
     Udall (NM)
     Voinovich
     Warner
     Webb
     Whitehouse
     Wyden

                             NOT VOTING--7

     Coburn
     Johnson
     Kennedy
     Martinez
     McCain
     Rockefeller
     Shaheen
  The amendment (No. 1017) was rejected.
  Mr. DODD. Mr. President, I move to reconsider the vote and lay that 
motion on the table.
  The motion to lay on the table was agreed to.
  The PRESIDING OFFICER. The Senator from Louisiana is recognized.


                             Kentucky Derby

  Ms. LANDRIEU. Mr. President, I know we are probably going to move 
forward on discussing the underlying bill. I ask unanimous consent to 
speak about a resolution I would like to discuss for a moment, about a 
wonderful event that actually took place in our country this weekend.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Ms. LANDRIEU. Mr. President, every year for 135 years, the country 
has been watching and cheering and celebrating the Kentucky Derby.
  While this event is not held in Louisiana--it is held in Kentucky--
many people in my State and around the country tune in. Some people 
have the opportunity to actually attend what has become one of the most 
extraordinary sporting events in our Nation's calendar year. This 
weekend was no exception. It was an extraordinary race. Anyone who 
watched it could attest to the tremendous skill of the Louisiana born-
and-bred jockey who rode Mine That Bird to a victory in a heart-
pounding, quite shocking and surprising victory. So this resolution 
just simply says:

       Whereas Calvin Borel, born and raised in St. Martin Parish, 
     Louisiana, began riding match horses at the age of 8;--

  As my husband says, we just sort of strap them on and let them go, 
but he most certainly learned at a young age--

       Whereas Mr. Borel began his professional career as a jockey 
     at the age of 16;
       Whereas [he] has won more than 4,500 career starts;
       Whereas [he] won the 135th Kentucky Derby by 6\3/4\ length, 
     the greatest winning margin since 1946;
       Where [he] is the first jockey since 1993 to win both the 
     Kentucky Oaks--

  Which is the fillies race--

     and the Kentucky Derby in the same year;
       Whereas in 2 minutes and 2.66 seconds, [he] and Mine That 
     Bird completed the race and placed first, making it [his] 
     second Kentucky Derby victory: Now, therefore, be it
       Resolved, That the Senate commends Calvin Borel and Mine 
     That Bird for their extraordinary victory at the 135th 
     Kentucky Derby.


[[Page S5060]]


  It is sporting events like this and races run like this on a horse 
that cost $9,500, I understand, that was trailored by the owner and its 
manager that keeps this sport exciting and open for so many. For all of 
us in Louisiana, we are very proud of this young jockey from down in 
the bayou, as we say, and for the pride that he brings to our State and 
to a wonderful industry.


                Take Our Daughters and Sons to Work Day

  Finally, let me take a moment before the Senator comes back to debate 
the underlying bill and submit to the Record a statement about an event 
that took place last week on Capitol Hill and actually around the 
country. It is an event that Senator Kay Bailey Hutchison and I proudly 
and happily, joyfully sponsor every year for the Senate; that is, Take 
Our Daughters and Sons to Work Day.
  It was started 17 years ago by Ms. Magazine, thinking it might be a 
good idea for girls, particularly girls between the ages of 10 and 16, 
to have an opportunity to go to work with their parents because many 
women, of course, do wonderful work at home raising children and 
working out of the home. But a lot of important work goes on outside of 
the home as well. Ms. Magazine thought it would be a great opportunity 
for girls, particularly, and then, of course, have included boys, to go 
anywhere where their parents work, whether that work is out of the home 
or in the home and actually come to appreciate the work that goes into 
keeping our society moving forward and this country moving forward.
  So Kay Bailey Hutchison and I cohosted. The Senator from Texas and I 
host this every year. I would like to first acknowledge her support, 
also acknowledge Ms. Magazine that founded this day, and to thank all 
of our Senators and staffers and workers around the Capitol who 
participated in that day.
  I ask unanimous consent to print in the Record the names of the young 
ladies who joined me that day.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

       Sophie Boudreaux, Meraux, LA, Chalmette High School; 
     Dominique Cravins, Washington, DC, St. Peter's School; 
     Heather Duplessis, New Orleans, LA, Metairie Park Country Day 
     School; Maya English, Baton Rouge, LA, St. George's Episcopal 
     School; Matisse Gilmore, Mitchellville, MD; Monet Gilmore, 
     Mitchellville, MD; Golnaz Kamrad, Washington, DC, Georgetown 
     Day School; Mallory MacRostie, Bethesda, MD, Bethesda Chevy 
     Chase High School; Lily Silva, Washington, DC, Georgetown Day 
     School; Mary Shannon Snellings, daughter of Senator Mary 
     Landrieu, Washington, DC, Georgetown Day School; Mary Agnes 
     Nixon, Washington, DC, Aidan Montessori School; Sydni Rita-
     Louise Sumas, New Orleans, LA, Ursuline Academy; Kelsey Teo, 
     Bristow, VA, Stonewall Jackson High School; Eliza Warner, 
     daughter of Senator Mark Warner, Alexandria, VA, Potomac 
     School; Brittany Watts, Tickfaw, LA, Hammond High School.

  Ms. LANDRIEU. These young ladies and many young men who joined them 
had a wonderful day, understanding what happens at the Capitol, working 
in the Senate. I thank them and their parents for making this day 
special for us and hope and trust that their day was inspirational to 
them as they think about their career opportunities in the future.
  I yield the floor and suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The bill clerk proceeded to call the roll.
  Mr. SCHUMER. I ask unanimous consent that the order for the quorum 
call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. SCHUMER. Mr. President, I will not offer my amendment at the 
moment. We are still trying to negotiate it. But I want to discuss an 
amendment I will offer, hopefully, with agreement. That is an amendment 
that would require the Secretary of the Treasury, in consultation with 
the Secretary of HUD and other housing-related Federal agencies, to 
develop a program to address the rising defaults and foreclosures in 
multifamily properties.
  The program is necessary because the same excesses that occurred in 
the single-family mortgage market also occurred in the multifamily 
mortgage market, leading to buildings that are significantly 
overleveraged with rent rolls that are unable to support basic 
operational expenses and maintenance. The tenants of these buildings 
had absolutely no input into the misguided decision of the owners and 
lenders who mortgaged the property beyond supportable levels, but they 
are the ones who will face the consequences of this investment and 
foreclosure, as owners are unable to meet monthly payments and maintain 
the properties.
  In New York City alone, it is estimated that 60,000 units of 
multifamily housing are at risk of disinvestment and foreclosure. We 
have similar problems in smaller ways in many upstate cities as well. 
We have seen buildings in New York where in order to make the loan 
underwriting work, lenders estimated tenant turnover rates that would 
double or triple the neighborhood average, rent increases that were not 
even legal under local law, and expected maintenance costs that were 
actually less than half of what the owner spent in previous years. This 
kind of basic underwriting malpractice has left tens of thousands of 
families in New York State and other States vulnerable. We are not the 
only ones. New York has the eleventh highest multifamily delinquency 
rate in the country, according to a recent Deutsche Bank report.
  The 15 States with the highest multifamily delinquency rates are not 
concentrated just in the Northeast or on the west coast. This is a 
truly national problem. I ask my colleagues to listen because their 
State may be among the one-third, or close to it, the 15 out of 50. 
They are Tennessee, Georgia, Florida, Michigan, Nevada, Texas, 
Illinois, Ohio, Indiana, Connecticut, Oklahoma, New York, Kentucky, 
Missouri, and Mississippi.
  While I am strongly supportive of the administration's efforts to 
help families across the country obtain loan modifications and other 
financing options, a similar effort to protect tenants of multifamily 
properties must be made. It must be made in a way to protect the 
tenants first and foremost and not let the developers and the 
investors, who did all the wrong, get away with wrongs.
  Housing experts in New York have begun to examine options to assist 
these buildings. There are a number of different ways that might be 
effective in addressing this problem. So the bottom line is, we need 
Federal expertise, leadership, and support to help determine the best 
course of action and implement a program across the country to ensure 
that innocent tenants do not have to pay the price for the poor 
decisions of landlords and lenders.
  This should be an easy amendment to support. I am not asking for any 
new money. We are certainly not asking to bail out any of the bad 
actors or even giving specific directions to the Treasury Department to 
take this approach or that one, although I have talked to the Secretary 
of HUD about this problem and, in fact, we worked on some problems 
related to this when he was the head of the HPD, the housing department 
in New York City.
  What we are doing in this amendment is simply asking the Congress to 
direct Treasury to examine this problem and develop a program to 
address it in whatever way they determine best. My hope is that the 
Treasury will consult with HUD. It is unfair that tenants of 
multifamily rental buildings are being left out in the cold while 
single-family homeowners receive focused attention from their agencies. 
Single-family homeowners should but so should those in multiple 
developments.
  I urge my colleagues to support the amendment.
  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. SCHUMER. 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. SCHUMER. Mr. President, I ask unanimous consent that once the 
Senate resumes consideration of S. 896 on Tuesday, May 5, the time 
until 10:50 a.m. be for debate with respect to the Corker amendment No. 
1019, with the time equally divided and controlled between Senators 
Dodd and Corker or their designees; that at 10:50 a.m., the Senate 
proceed to vote in relation to the amendment, with no amendment in 
order to the amendment prior to a vote.

[[Page S5061]]

  The PRESIDING OFFICER. Without objection, it is so ordered.

                          ____________________