[Congressional Record Volume 158, Number 22 (Thursday, February 9, 2012)]
[House]
[Pages H670-H677]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
THE PROGRESSIVE MESSAGE
The SPEAKER pro tempore. Under the Speaker's announced policy of
January 5, 2011, the gentleman from Minnesota (Mr. Ellison) is
recognized for 60 minutes as the designee of the minority leader.
Mr. ELLISON. Mr. Speaker, there are a lot of important issues facing
the American people, none more important than their economic livelihood
and viability. So we're going to be talking today during this Special
Order about economic justice, economic opportunity, and the fight for
the American middle class.
{time} 1220
Mr. Speaker, I'm cochair of the Congressional Progressive Caucus. The
Congressional Progressive Caucus is that caucus that comes to Congress
to band together to stand up for the American Dream, the idea that all
Americans, no matter which color they may be, whether they are disabled
or not, whether they are straight or gay, or what their religion is,
have a right to full participation and opportunity to grab that
American Dream as one of our core beliefs. The Progressive Caucus
believes in clean air and a clean environment, believes that all
Americans, all people across the world have a right to clean air, clean
water, and food free of pesticides and toxins.
The Progressive Caucus is the organization that is four square for
civil rights for all people. We believe that it's a national disgrace
that women are paid 80 cents for every dollar a man makes. We think
it's a national disgrace to not be able to love whomever you love and
want to be with. We think it's a national problem that people in our
society, which was founded on the idea of religious tolerance,
sometimes find themselves the target of religious hate in this area.
And we are four square dedicated to the idea that peace should be the
guiding principle of our Nation and that diplomacy and development are
good things, and that war is almost always a bad thing. Although
sometimes it's necessary, diplomacy is always better. We don't send our
people into harm's way. That's who the Progressive Caucus is. That is
what we are about, and I'm going to offer time tonight, Mr. Speaker,
for a progressive message.
So let me begin with that progressive message. We are here to talk
about the progressive message; and tonight, we're going to address the
issue of economic viability. Working American families are getting
crushed, and our middle class is shrinking every day. But here in
Washington, our friends on the other side of the aisle, the Republican
caucus, is in control of the House. And while millions of people are
facing foreclosure and unemployment, sadly, we see Americans continuing
to hurt, and their problems are not being addressed.
This week in Congress, if I could just talk about what we did this
week, the Republican majority did not bring up a single jobs bill. We
didn't talk about jobs this week. Here we are at the close of the week,
and we're not talking about jobs. They did not bring up a bill to keep
Americans in their homes and address foreclosure, nor did we talk about
cleaning up our air and our water, or building our economy or our
Nation's crumbling infrastructure. No, we weren't doing that. We were
doing something else, and it had to do with scoring points in an
election.
One of the things we did today, which I think was important, but it
was an idea that came from the Democratic-majority Senate and
originated with great Democrats Tim Walz and Louise Slaughter, is that
we voted on a bill to stop trading on congressional knowledge, the
STOCK Act. Today, we voted on a bill designed to stop Members of
Congress from profiting on confidential information they receive while
doing their jobs. You would think that this goes without saying. But,
sadly, that is exactly what some politicians have been doing. We voted
on the STOCK Act today, the Stop Trading on Congressional Knowledge
Act, and I was happy to support this bill.
Although my colleagues, Louise Slaughter and Tim Walz, are pushing a
bill which I think was a better version, we voted on the Senate version
today. But the price for getting that bill in front of us, the price
for fighting to get that bill in front of us was a carve-out for a
special interest, and that is too bad.
The bill came before us today, and I voted for it. But the public
should know a few things about the legislation. Only after stripping
out a provision to stop the so-called political intelligence would the
majority even consider voting to stop Members from making bets on
confidential information. We wonder why Congress has a 10 percent
approval rate. After months of calls for action by House Democrats,
House Republicans have finally relented; and the House took up the
STOCK Act today, clarifying that Members of Congress and congressional
staff, executive branch officials, and judicial officers are subject to
the same insider trading rules as everyone else.
Unfortunately, leadership in the majority House caucus took
transparency and accountability measures and rewrote them in secret in
the dark of night. And the majority caucus, the Republican caucus,
weakened the bill, dropping a provision that will require those who
peddle political intelligence for profit to register and report, and
eliminating the anti-corrupting provision added by the Senate and
unanimously approved by the House Judiciary Committee in December.
Regarding the political-intelligence provisions, Senator Grassley,
Republican of Iowa, responded, It's astonishing and extremely
disappointing that the House would fulfill Wall Street's wishes by
killing this provision.
So Republican Senator Grassley even had to admonish the House to say,
why would we weaken the bill, dropping a provision that would require
those who peddle political intelligence for money to register and
report their activities? That's too bad. If Congress delays action, the
political-intelligence industry will stay in the shadows--just the way
Wall Street likes it.
It's time to act on this legislation and take a first step toward
restoring
[[Page H671]]
trust in government. We must hold a swift House-Senate conference to
strengthen this Republican-majority bill that passed through here
that's a weakened piece of legislation.
Last week, the Senate bill passed a stronger measure by a vote of 96-
3, and a stronger bipartisan House bill is cosponsored by 285 Members,
including 99 Republicans. The so-called political-intelligence industry
serves no one. All it does is really pad Wall Street profits off of a
rigged game. This insider trading is nothing more than Wall Street
insiders pumping Washington insiders for information so that they can
place bets on stocks. Political-intelligence firms have grown
drastically over the last few decades and are now a $100 million
industry.
Every day, these firms help hedge funds and Wall Street investors
unfairly profit from nonpublic congressional information, and these
firms have no oversight and can freely pass along information for
investment purposes. A 2005 story on insiders profiting off of a last-
minute government bailout of companies embroiled in asbestos litigation
was a catalyst to the STOCK Act. A recent Wall Street story on the
prevalence of the intelligence industry reinforces the need for this
bill. Without the STOCK Act, enforcement officials are left in the dark
on who is paying and playing in the political-intelligence industry.
This is why we need the whole STOCK Act. The Stop Trading on
Congressional Knowledge Act, the STOCK Act, would shed necessary light
on a lucrative industry that has been lurking in the shadows since the
70s. H.R. 1148 establishes regulations for the political-intelligence
industry by amending the Lobbying Disclosure Act to apply the
registration, reporting, and disclosure requirements to all political-
intelligence activities just as they apply to lobbyists now. This is an
important provision, and it's an essential piece to the STOCK Act's
purpose of banning insider trading based on congressional knowledge.
Regarding support for the STOCK Act, the STOCK Act has a lot of
support, Mr. Speaker. The STOCK Act has a broad base of support from
organizations dedicated to government reform, including Public Citizen,
Citizens for Responsibility and Ethics in Washington, Common Cause,
Democracy 21, the League of Women Voters, Project on Government
Oversight, the Sunlight Foundation and U.S. PIRG.
Here is a summary of the STOCK Act, and this is a bill authored by
Tim Walz and Louise Slaughter, of which I'm an original co-sponsor.
It's a stronger version than what came through here today, and it's
what our country needs. The STOCK Act requires firms that specialize in
political intelligence who use information obtained from Congress to
advise financial transactions to register with the House and Senate,
just like lobbying firms are required to do.
It prohibits Members, their staff, executive branch employees, and
any other person from buying or selling security swaps or commodity
futures based on congressional and executive branch nonpublic
information. It requires a more timely disclosure of financial
transactions above $1,000 for those Members and staff that are already
required to file annual financial disclosures.
{time} 1230
It amends the House ethics rules to prohibit Members and their
employees from disclosing any nonpublic information about legislative
action for investment purposes. My constituents don't have insider
traders looking out for their bottom line.
Now, let me just talk a little bit more about the STOCK Act.
While the House voted this morning on the STOCK Act, making clear
that rules against insider trading apply to Members of Congress,
congressional staff, executive branch officials, and judicial officers
and employees, the version brought to the floor by Leader Cantor was
weakened by Republicans before it actually came to be voted on. The GOP
rhetoric suggesting otherwise isn't fooling anybody.
The Associated Press weighed in on this issue, and they said:
The House passes Republican-written insider trading bill
that has heavy Wall Street influence. The House has passed a
bill to ban Members of Congress and executive branch
officials from insider trading, but critics from both parties
accuse House Republican leaders of caving in to investment
firms by eliminating a proposal to regulate people who try to
pry financial information from Congress.
The New York Times had something to say, too. Here's what they said
in an editorial:
The House's Less Persuasive Ban on Insider Trading. House
Republican leaders appear ready to bow to election-year
pressure and pass a bill banning lawmakers from using
nonpublic information they hear on the job to make financial
investments. The House legislation, however, is missing two
vital provisions that are in the Senate bill that won
overwhelming approval last week. If the goal is to root out
corruption and raise the public's low opinion of Congress,
the House should approve the full range of reform in the
Senate bill.
The Washington Post also had something to say about this, Mr.
Speaker. What they had to say is:
The House should take the opportunity to help crack down on
public corruption. The House of Representatives is expected
to take up, Thursday, a useful measure to prohibit insider
trading by Members of Congress and to beef up disclosure
of lawmakers' financial transactions. Unfortunately, the
version of the measure produced by the House majority
leader, Eric Cantor, omits one of the most important parts
of the bill passed by the Senate, a provision that would
restore prosecutors' ability to go after official
corruption.
So, Politico, which is one of our local papers that talks about
Congress, took up this issue and writes, ``Cantor under fire over STOCK
Act.'' What the Politico writes is this, Mr. Speaker:
House Majority Leader Eric Cantor (R-Va.) has released his
version of a congressional insider trading ban, and it strips
a provision that would require so-called ``political
intelligence'' consultants to disclose their activities, like
lobbyists already do. It also scraps a proposal that empowers
Federal prosecutors going after corruption by public
officials. That stoked backlash from Democrats--yes, it did--
and even some Republicans, who are furious at Cantor and are
accusing the Virginia Republican of watering down the popular
legislation that easily passed the Senate last week.
``It's astonishing''--this is a quote from the Politico article:
It's astonishing and extremely disappointing that the House
would fulfill Wall Street's wishes by killing the provision.
That's what Senator Chuck Grassley said in a statement. If
Congress delays action, the political intelligence industry
will stay in the shadows, just the way Wall Street likes it.
Of course, Mr. Speaker, Roll Call had to weigh in on this issue as
well. It sounds like there's a pretty strong consensus that the House
version we passed was weakened and watered down and not what the public
was expecting.
Roll Call says:
Grassley, others rip House STOCK Act. Senator Chuck
Grassley is ripping the House version of a major reform bill
passed last Tuesday, calling it ``astonishing'' that House
GOP leaders would drop a provision requiring political
intelligence consultants to register as lobbyists. Senator
Grassley joined a chorus of watchdog groups and Democrats
criticizing the House version.
Melanie Sloan, President of Citizens for Responsibility and Ethics in
Washington, said: ``The Cantor provision is a sham and aimed at
tricking Americans into thinking he's dealing with the issue.'' That
was a quote.
So, whether you're talking about Politico, Washington Times,
Washington Post, Associated Press, Roll Call, or whether you're just
talking about members of the House Democratic Caucus or citizens across
the Nation, we did pass a version of the STOCK Act today. It was
a weakened version. It wasn't good enough. And, Mr. Speaker, if
Americans across this country decided that they were going to demand
that there be a conference committee in which the stronger provisions
were adopted, I think that would be a very good thing.
Americans across this country, I think they agree with what's written
in this Washington Post article. They write:
A scaled-back ethics bill headed toward likely passage in
the House Thursday despite complaints from Senators that
Republican leaders are jettisoning--that means getting rid
of--several key provisions that won overwhelming support in
the Senate last week.
Of course Think Progress probably echos the sentiments of the
American people, too, Mr. Speaker, as they wrote in their blog, ``House
Republicans prepared to vote on watered-down congressional insider
trading ban.'' Here's what they say:
[[Page H672]]
Since a ``60 Minutes'' report showed that Representative
Spencer Bachus (R-Al.) profited from information he obtained
in a private economic briefing in 2008, Congress has moved
quickly to pass a bill to ban insider trading by its Members.
House Majority Leader Eric Cantor has made several changes to
the legislation which appear intended to at least weaken the
final product, if not kill it outright.
That is what they said at Think Progress.
Of course the New York Times, they're in this, too. This is an issue
of serious public concern, and we would expect their editorial writers
to weigh in. And what they said was this, Mr. Speaker:
With the House poised to take up a major ethics bill,
Republican leaders have deleted a provision that would, for
the first time, regulate the collection of political
intelligence from political insiders for the use of hedge
funds, mutual funds, and other investors.
Representative Louise Slaughter, Democrat of New York, said
lawmakers and the public need to know more about the
activities of these professionals, who she said ``glean
information from Members of Congress and staff and sell it to
clients who make a lot of money off it.''
You know, Mr. Speaker, I'm betting that a lot of people across
America don't even know that this practice even takes place. I'm
betting that a lot of people across America don't realize that there
are people who sort of scurry around in the shadows, looking for
tidbits of information which they could use to make an investment
decision, and that this is a multimillion-dollar industry.
Let me also move back and just say that, Mr. Speaker, I doubt that
the American people really realize that there is important information
that can affect stock price that is thrown around around here. You
would think that it would be just common sense, Mr. Speaker, that as we
as Members of Congress are hired to pursue the public interest, that no
one would ever use that information to advance their private commercial
interests. There's nothing wrong with Members of Congress owning a
business or something like that. I mean, this is America. But to say
you're going to Congress to get information to try to trade stocks and
then getting rich off that information seems, to me, a real problem.
Now, I don't know what the facts are. All I know is what I saw on
``60 Minutes.'' But it was alleged that a Member of Congress was in a
meeting, pursuing his responsibility to promote the public interest,
left that meeting, and using information from that meeting, purchased
stock options and basically made a bet that the economy would go down.
So I ask you, Mr. Speaker, can a person, charged with a public duty
to uphold the public interest simultaneously pursue their private
interests? And what happens, Mr. Speaker, when those two things are at
odds?
If your job is to keep the economy afloat, but it would make you
money if the economy goes down because you have essentially bought
stock options where you would financially gain from the loss of value,
what is one to do? Well, if they're a public service employee, if
they're a public official, they should pursue the public interest, and
the law should forbid them from trying to pursue their private
interests at the public's expense.
{time} 1240
And yet, we do know that these things, that there's good evidence
that these things may well have happened and that there needs to be
accountability all around. And it is disappointing that when we
finally, after these things finally get to the point where we're going
to pass a bill, that we don't go all the way. We make carve-outs for
the political intelligence industry. We make carve-outs for people here
and there. This is not right.
The Senate version, which has accountability, which has prosecution
authority, and which bans this political intelligence industry from
just operating in the shadows, that is what we should be doing, not
making carve-outs for them and sweetheart deals.
So I'm joined now by my good friend from the great State of Ohio,
representing the northern Ohio area. There's really no one, Mr.
Speaker, who has been a greater advocate for consumers than Marcy
Kaptur.
I yield to the gentlewoman from Ohio.
Ms. KAPTUR. I thank my dear colleague from Minnesota, and thank you
for your leadership on so many issues here.
I listened with care to what you've been presenting today to give
voice to the American people from coast to coast. And I want to thank
you, in particular, for the work you've done on mortgage foreclosures,
on holding Wall Street accountable, Congressman Ellison. No one has
fought harder. Minnesota's been affected, your home city of Detroit,
all across northern Ohio, Toledo to Sandusky to Lorain to Cleveland to
Parma, all these communities struck so hard by Wall Street's
malfeasance.
And I wanted to join you today as you keep a focus on who the
wrongdoers really have been, and how we help the Republic heal; to
thank the Obama administration for the efforts they've made to date on
a major settlement that's being announced during the same timeframe as
we speak here, where individual States and five of the major Wall
Street banks who are responsible, who used widespread fraudulent
paperwork that precipitated the foreclosure crisis, that this
settlement will actually bring some measure of justice.
And we ought to claim a great deal of credit because the Progressive
Caucus has been working so hard on this, and housing and the mortgage
foreclosure crisis has been at the top of our agenda.
The settlement, the initial settlement will reportedly impose a $26
billion penalty against Wells Fargo, Bank of America, JPMorgan Chase,
Allied Financial, and Citigroup that were at the heart of the schemes
that led to the securitization and collateralized debt obligation risk-
taking. The total amount could grow to $30 billion or $45 billion if
additional banks join the settlement. Given the extent of the damage
they've caused, it's a start, and frankly, a very important one.
We can't forget that millions of America's families lost their homes,
and countless more are still dealing with foreclosure. And our cities
have empty hulks of neighborhoods that are struggling as a result.
If you come to places that I represent, as you've mentioned, in
northern Ohio you can see the thousands of vacant structures that these
banks left to decay. They didn't even manage them well once they
possessed them. In neighborhood after neighborhood, the damage these
banks inflicted is incalculable as they achieved the largest transfer
of equity and wealth from Main Street to Wall Street. They've made
every community more poor.
This agreement is the largest joint Federal/State settlement ever
obtained and the result of unprecedented coordination between the
various corners of our government and the States. And it needs to be a
major settlement.
One in five American families with a mortgage today--this is an
astounding number--owe more than the house is actually worth by an
average of over $50,000. The collective negative equity across the
Nation is over $700 billion.
For years I've come to this floor urging Congress to do more, and one
critical part of this agreement is that it does not provide blanket
immunity to the banks for their misdeeds. While the ink is barely dry
on this agreement, the press is reporting, and I quote, Officials will
also be able to pursue any allegations of criminal wrongdoing.
And I know the congressman and I want to go down that road, and I
wish to place in the Record an article from The New York Times this
week that talks about how African American New Yorkers making more than
$68,000 are nearly five times as likely to hold high interest mortgages
as Caucasians of similar income.
[From the New York Times, Feb. 7, 2012]
That Comeback Trail for the Economy? Here, It's Littered With
Foreclosures
(By Michael Powell)
To walk 145th Street in South Jamaica, past red-brick homes
with metal awnings and chain-link fences, is to find a storm
of immense destructive power still raging.
Three years ago, when I wandered this block south of Linden
Boulevard in Queens, banks had foreclosed on eight homes. In
the years since, banks have filed notice against a half-dozen
more owners. Some of those homes sit abandoned, plywood
boards nailed across doors and windows, as if to guard
against further spread of this plague.
We are accustomed to hearing politicians talk of a halting
recovery from the recession. They detect heartbeats in the
job market and flickers of life in house sales. New
[[Page H673]]
York and New Jersey, our governors proclaim, are on the
comeback trail.
Not here.
A dozen miles from Midtown Manhattan, the foreclosure belt
stretches across the heart of black homeownership in this
city, from Canarsie and East New York in Brooklyn, to
Springfield Gardens and St. Albans, Queens, where Fats
Waller, Count Basie and Ella Fitzgerald once owned handsome
Tudor-style homes.
Black Americans came late to homeownership for reasons
deeply rooted in our tragic racial history. Black New Yorkers
making more than $68,000 are nearly five times as likely to
hold high-interest mortgages as whites of similar income, and
their default rates are much higher. Now a generation watches
as its housing wealth is vaporized.
Organizers with the Neighborhood Economic Development
Advocacy Project pored over 2011 mortgage default data. They
found that 345,000 city mortgages were in default or
delinquent last year. In corners of southeast Queens, banks
filed as many as 150 delinquency notes for every 1,000
housing units.
Attorney General Eric T. Schneiderman says that statewide
the number of New Yorkers at risk of losing homes exceeds the
population of Buffalo, Syracuse and Rochester combined.
In Jamaica, ``for sale'' signs sit two, three and four to a
block. Real estate agents resemble fishermen who've kept
lines in the water too long. Of late, matters have grown
worse. The federal government has stopped paying counselors
and lawyers for those at risk of foreclosure, and Gov. Andrew
M. Cuomo, who takes pride in his reinvention as a fiscal
conservative, has declined to foot the bill.
I stop Randy Ali, a Guyanese ironworker, as he tinkers with
his SUV on 145th Street. Which is his house? He nods at a
two-story brick home. ``I paid $360,000.'' He gives a
mournful nod. ``I just got a notice from the city that it's
valued at $215,000.''
He looks embarrassed. How could he foresee a housing
collapse this huge? ``You have a family, you want a place to
live.'' Pause. ``Do I walk away?''
Say this much: New Yorkers are better off than those who
live in the acres of foreclosed homes in the deserts around
Phoenix and Las Vegas. Our politicians are not always an
inspiring lot, but New York has a social democratic
tradition, and they wove a safety net.
Banks must submit to months of mediation before
foreclosing, and lawyers must attest that the bank can prove
ownership. Judges here show waning patience for the three-
card monte act of some banks.
Just a few weeks ago, the Appellate Division of State
Supreme Court took the unusual step of ruling that Bank of
America could not foreclose on an Orange County home of a New
York City police officer. The judges upheld a lower court
ruling that the bank's ``conduct was nothing short of
appalling.''
Still, the fevers rage on.
On Friday, I stepped off the elevator in State Supreme
Court in Queens. Shafts of sun poured across the marble
floor, as dozens of men and women sat in shadow, awaiting
mediation.
A computer list is taped to the wooden door frame. Every
foreclosure case has been adjourned 4, 5, 10 times. More
homeowners hold tight to their homes than a few years ago,
but the cost is weeks of missed work and legal bills piled
high.
Freeman N. Hawes Sr. walks into the mediation room. He's a
husky, cheerful black man, from Rosedale. The bank agent nods
pleasantly. She thinks the bank might grant him a mortgage
modification. But she can't get the bank on the phone just
now.
Perhaps next time?
The mediator sets a new date. Mr. Hawes walks to a bench
and, from a brown plastic bag, pulls dog-eared letters from
Nationstar Mortgage. Nationstar, the letters show, agreed
that he had made his payments and promised to modify his
mortgage in 2010, and again in July 2011: It broke both
promises.
He has lived in Rosedale, a black middle-class
neighborhood, for decades. He's edging toward 70 and holds
two jobs with no plans of retiring.
``I'm not one to hold grudges,'' he says. ``The Lord says I
can live 125 years, so I'll keep paying the bank. But why
can't I get to the finale?''
That's a question that haunts thousands of homeowners.
Madam Speaker, a major settlement was just reached between the
individual states and 5 of the major Wall Street banks whose widespread
use of fraudulent paperwork fueled the foreclosure crisis.
This initial settlement will reportedly impose $26 billion in
penalties against Wells Fargo, Bank of America, JP Morgan Chase, Ally
Financial and Citigroup. The total amount could grow to $30 billion or
$45 billion if additional banks join the settlement. Given the extent
of the damage that they caused, it's a start, and an important one.
We cannot forget that millions of American families lost their homes,
and countless more are still dealing with foreclosure. If you come to
places I represent in Northern Ohio, you can see the thousands of
vacant structures that these banks left to decay throughout individual
neighborhoods. The damage these banks inflicted is incalculable.
This agreement is the largest joint federal-state settlement ever
obtained, and it is the result of unprecedented coordination between
various corners of the government. And, it needs to be. One in five
American families with a mortgage owe more than the house is actually
worth today, by an average of $50,000. The collective negative equity
across the nation is $700 billion.
For years, I have come to this floor urging Congress to do more. One
critical part of this agreement is that it does not provide blanket
immunity to the banks for their misdeeds. While the ink is barely dry
on this agreement, the press is reporting that ``Officials will also be
able to pursue any allegations of criminal wrong doing.'' And, this is
very important. According to the Justice Department, ``the agreement
does not prevent any claims by any individual borrowers who wish to
bring their own lawsuits.''
Yes this is an important step, but we must remember the scope of the
damage and the magnitude of fraud that was committed. Much work still
needs to be done.
During the past decade, we as a country failed to take white collar
crime seriously, and we as a country are still dealing with the damage
that was done to our housing market. Already back during the Bush
Administration, the FBI testified before Congress that they were seeing
an epidemic in white collar crime and that we did not have anywhere
near enough agents to deal with it. Well, history has shown that we
never provided the FBI and other investigators and prosecutors with the
full resources they needed. During the much smaller Savings and Loans
crisis of the 1980s, we set up a series of strike forces based in 27
cities, staffed with 1,000 FBI agents and forensic experts and dozens
of Federal prosecutors. We did not do that this time around.
I have a bill that I have been asking for my colleagues to support,
week in and week out. It is H.R. 3050, ``The Financial Crisis Criminal
Investigation Act.'' This bill would authorize an additional 1,000 FBI
agents, a sufficient number of forensic experts, and additional
employees by the Attorney General to prosecute violations of the law in
the financial markets.
Like today's announcement, we have seen some progress in getting more
FBI agents, but more needs to be done. In last year's appropriation,
Congress made a bipartisan decision to include funding for more than
two hundred additional agents. It's good news, but we cannot be soft on
this kind of crime. Families, neighborhoods, and whole communities were
victims.
Earlier this week, the New York Times reported on what it described
as a foreclosure belt that runs through the heart of African American
homeownership in New York City. I want to include this article in the
record, because it details a very important element of the foreclosure
crisis. According to the Times, black New Yorkers making more than
$68,000 are nearly five times as likely to hold high-interest mortgages
as whites of similar income, and their default rates are much higher.
Now a generation watches as its housing wealth is vaporized.''
In Cleveland, we see neighborhoods struggling to survive as well. In
Cuyahoga County alone, there now are an estimated 30,000 vacant
structures. We see shocking pictures of homes stripped of everything
from the siding to the kitchen sink, even the floor boards. We see
homes that were once worth $100,000 stripped of their entire value. We
see whole communities that were victimized by the actions of Wall
Street.
Just last month, the President announced during the State of the
Union a new working group to look into mortgage fraud. It will
coordinate efforts between the FBI, the Justice Department, and various
states to go after those on Wall Street who have perpetuated fraud in
the markets, using mortgage backed securities. Yet another good step,
but we have a lot more work to do.
It is well past time for Wall Street to accept responsibility for its
role in the housing crisis. Big Wall Street banks and the secondary
markets made obscene profits during the 1990s up to the market crash in
2008. During that period, banks targeted communities, looking for
individuals to take on mortgages the banks knew they could not afford.
And then Wall Street went looking to make fast money on individual
American dreams and local mortgage markets. Those responsible did not
care what ultimately happened to families, communities, or whole
cities. And when the market collapsed, the American taxpayer actually
bailed them out. Today's settlement is big news, and it's well past
time that Wall Street started to pay up. But, we cannot forget that
this story is far from over, and our work is not over.
I think the civil rights aspect of what has gone on is
extraordinarily important. I don't want to overstep my time boundaries
here, Congressman Ellison. Do I have a couple of extra minutes in this
period or not?
Mr. ELLISON. Well, yes you do. But may I ask a question before you
continue on?
[[Page H674]]
Ms. KAPTUR. Please.
Mr. ELLISON. We may see as many as 10 million homes go into
foreclosure from the beginning of this crisis to the end. How important
to the average home owner is this settlement? Is it going to help them?
I yield back to the gentlelady.
Ms. KAPTUR. I think what's going to happen with this is, even though
over a million homeowners are likely to be helped and several hundred
thousand get some recompense, maybe an average of $2,000 per household,
what's going to happen is it's going to precipitate more foreclosures
as the system continues to progress. And that is a deep concern of mine
because these banks have not been noted for treating customers well.
According to the Justice Department, however, the agreement does not
prevent any claims by individual borrowers who wish to bring their own
lawsuits. And I think it's incumbent upon lawyers across this country,
our Progressive Caucus, to look for legal remedies to continue to gain
sweet justice for those who have been so harmed.
Mr. ELLISON. Reclaiming my time, now here's the other thing. So we
know that there may be 10 million people who lost their homes in
foreclosure. Maybe a million will get help. That's good. I hope they
get it.
But has anybody gone to prison for mortgage fraud schemes? I mean,
here's why, I want you to address this question, but let me lay it out
just a tad for you.
So what we have here, we know, is that people were drawn in with high
pressure tactics to get in a mortgage that they didn't understand, and
sometimes were even misstating the income. There are people who would
say, look, I didn't borrow that much money. I have no idea where that
amount came from.
And then was a bunch of signing stuff that happened that people were
not aware of. And that sort of skirted the reality.
Ms. KAPTUR. If the gentleman would yield, the robo-signing.
Mr. ELLISON. The robo-signing. That's right.
And then another kind of amazing thing that happened was that people
would underwrite mortgages, not based on the ability of the borrower to
pay, but based on their ability to sell that mortgage into the
secondary market. And then it would get repackaged into a mortgage-
backed security which, somehow miraculously, you know, these things
that were stated income, no income, no job loans, falsified income for
these things, made it into a mortgage-backed security which then was
rated as triple A in many cases.
There's got to be some fraud and misrepresentation there. And so it
just seems like the system was full of misrepresentation, fraud and all
that. Have we investigated this thing to the point where there are
people to hold accountable before we're settling this case?
Ms. KAPTUR. Well, you know what's important to point out. You asked a
critical question because this settlement does not deal with those that
originated mortgages. It only deals with those mortgages that were held
in the secondary market. And so it doesn't claw black to the
perpetrators of the scheme, and that's why I'm saying this is an
important first step.
We also need, in every city, as we had during the savings and loan
crisis, strike forces of FBI agents. There were maybe 55 agents working
on this. We tried to boost that number to 200. During the S&L crisis we
had 1,000. We need accounting and forensic experts to piece together
what happened in community after community.
Congressman, in my area there were liars loans that were targeted to
senior citizens and the disabled.
Mr. ELLISON. Liar loans?
Ms. KAPTUR. Liars loans. They would go up to a senior citizen, a
woman after she'd lost her husband and they would say, ma'am, you know,
we feel very sorry for you, but we want you to know we have a deal.
You'll never have to worry about your financial future again. And they
got her to cash out her equity, and they put one of these balloon
payments on there, so she ended up having to pay more than she could
afford 10 years out.
This is what happened to people. There's so much crime inside of what
was done in community after community. And what's been happening at the
FBI is they have not been able to beef up their Financial Fraud
Division, and they've been held--that's why you haven't had the people
arrested.
Mr. ELLISON. Reclaiming my time, I want to ask you a question about
that.
So over the course of the last several months, our friends on the
Republican side of the aisle--I'm just being honest, and I don't think
even they would disagree with this--have been trumpeting this idea, the
government's too big. We've got to cut. We've got to cut. We just have
to cut. Cut, cut, cut, cut, cut, just cut. Scale it back, shrink it
down, make it smaller. Get rid of government.
One iconic conservative figure said we've got to shrink government to
the size where you can drown it in a bathtub.
{time} 1250
Now, if we were to shrink government to the size where we can drown
it in a bathtub, where are we going to get these lawyers and
investigators to investigate mortgage fraud?
Ms. KAPTUR. There will be no justice.
The Congressman has pointed out something that is extraordinarily
important. There are those who seek to harm the American people,
whether it's through financial crimes or those who are true enemies of
our Republic; and we have to be strong on all fronts. In this arena of
prosecution, we have been very weak.
Mr. ELLISON. Have we really investigated the extent of the wrongdoing
before we settled the case? I mean, I'm glad there has been a
settlement. I hope that it brings justice to everyone. I suspect it
will bring justice to some people. I hope so. But my question is, Do we
know the extent of the harm of the bad actors?
Here's the thing. The originators might not be part of this, but
these secondary-market actors, in my view, are culpable, too, because
they had to know if they read the mortgages, if they read the
documentation, they had to say, Wait a minute, something's funny here.
We've got a 72-year-old retired widow with a stated income of $160,000
a year or $500,000 a year. It just doesn't make sense that there would
be that many widows earning that kind of income. Now, there might be
some who have that kind of wealth, but that kind of income when they're
in their retirement years? There's got to be something fishy here.
Ms. KAPTUR. It reminds me of baseball. You've got some players who
are out on the field. They're saying, Well, you've got to hold the
shortstop accountable for a little bit of what he did when he's out
there on the field. But you've got the team coach sitting in the
dugout. Right? They haven't touched the coach. They haven't even
touched all the players yet, and they sure haven't seen the one who's
calling all the plays.
So what they're dealing with here are some of the mortgages in the
secondary market; they haven't touched the coaches. They haven't
touched the originators on the mortgages in this particular settlement.
Now, in terms of you said how much does it help, the hole to our
economy is several trillion dollars, counting unemployment and lost
revenues and so forth. Overall, the TARP was $700 billion. I didn't
support it. This settlement is maybe $25 billion. Ohio alone had a gap
about that large. So when you look at the settlement, it's important,
it's a victory. But we've got to take the next step. We've got to get
the first baseman, the third baseman, the catcher, the batter, and then
we've got to go after the coaches in the dugout.
Mr. ELLISON. You mentioned the S&L crisis. In the S&L crisis, we had
a thousand Justice Department lawyers going after this thing. We've got
50,000 Justice Department lawyers going after this recent housing
foreclosure crisis. Can we even compete with some of these titans who
the Justice Department has to deal with with that small number?
Ms. KAPTUR. I'll tell you, Congressman, one thing we need to do is
look at some of the people that sit over at the Justice Department and
where they used to work before they got there, because I think one of
the reasons that prosecution isn't occurring at the level that it
should is there is some paralysis in some places because of those
[[Page H675]]
who are able to block a play. They're able to block prosecution.
We have a bill, H.R. 3050, the Financial Crisis Criminal
Investigation Act, that would authorize an additional 1,000 FBI agents.
That's just as many as we had during the S&L crisis, which is much
smaller than what we have today.
But across our cities, across our regions, we don't have the agents
in place to go after the crimes we've been talking about.
Mr. ELLISON. I would like to ask the gentlelady from Ohio, we've
talked about who lost. Homeowners lost, even homeowners who never lost
their home in foreclosure and never missed a payment, their home value
dropped; a lot of people lost. But did some people really make a lot of
money off of this crisis?
Ms. KAPTUR. They made the highest salaries in the country, bonuses.
We didn't take a penny away. I had a bill to take 100 percent of the
bonuses away. Guess what? They never bring it on the floor. We couldn't
even take the bonuses away, much less their yachts, their seven houses,
all the fancy cars. They're living a great life, and they believe they
are immune from prosecution.
Mr. ELLISON. So far they're right.
Ms. KAPTUR. It's not a pretty picture.
Mr. ELLISON. Many, many people suffered in this foreclosure crisis.
It's also that cities suffered as cities were required--they used to
have a taxpaying citizen in the home. Now, after the foreclosure with
all of this stated income and the dishonesty and everything, they have
no one living there, they have weeds growing, dead dogs there, they
have an attractive nuisance where, you know, sometimes awful things
happen in those abandoned houses. So cities have seen their coffers
drained. They went from a plus-property taxpaying person to now an
expense on the tax rolls.
We've seen a reduction in the overall property tax revenue of cities
which they need to put on vital services for residents of cities,
streets, cops, fire, all of that stuff.
Ms. KAPTUR. And the school districts, Congressman Ellison. When you
look at the revenues that are bleeding away from school districts, the
harm these big banks did--and they used to be speculation houses--and
then they changed their name to banks. They got to be holding banks
then.
But if you look at the harm that they caused across America, it's
still not over; and they're not being held accountable. Actually, they
got richer. As a result of this crisis, six banks now control two-
thirds of the finances of this country.
Before the crisis, they controlled about 40 percent. So they just got
bigger and more powerful while community after community has been
struck with more homelessness, with declining revenues to school
systems, declining revenues into coffers so they can't hire police. The
drug trade has just locked down in some of these communities as people
struggle to earn their way forward in the most unfortunate way.
You look at the harm this has caused around the country, it's
profound.
I gave a Special Order the other day, and I said I think what we
ought to do with these big bankers, places like Goldman Sachs and
Citigroup, they ought to come to our homeless shelters and scrub the
floors. Once we get them prosecuted, and I wait for that day, wouldn't
it be great if the CEO of Goldman Sachs had to come to a homeless
shelter in Minneapolis and scrub the floors and join Habitat for
Humanity for a couple of years and go try to fix up some of these
houses in these communities?
They haven't confronted their damage. They feel they're being held
harmless, and you know what, they are.
Mr. ELLISON. What happens is they profit from this mortgage fraud.
They make exorbitant monies as they securitize these bad mortgages.
They make exorbitant money as they collected on these credit default
swaps as these mortgage-backed securities went bad. Various people made
gobs of money, bonuses that just boggle the mind how big they are.
But then, see, your point is interesting because they don't see the
damage that they caused because they have--some of them even helicopter
from their homes to their offices. Others of them are in limousines
just flying down the highway back to their country villa from their
downtown Manhattan skyscraper, so they don't see the damage. They don't
drive through Cleveland and Detroit and Minneapolis and other places
where whole neighborhoods have been sucked out because of the damaging
behavior that they engaged in.
I think that it would be important after they served their jail time
to come and be with the people who they harmed and have to explain the
reason that we have created and exacerbated homelessness is because we
just love money that much. Having two or three yachts and a couple of
boats wasn't good enough. We needed more and more and more; and that's
why we wrecked your city, damaged your neighborhood, and put you out of
your home.
Ms. KAPTUR. What they have done are capital crimes. They have harmed
our Republic so much with this massive transfer of wealth. I think the
best thing the American people can do is if they are paying a mortgage
loan or a car loan or a student loan to any one of these big
institutions that harmed America, take it out, renegotiate that loan
with a local institution, credit union, community bank that didn't do
this harm to the Republic. That's something every American family can
do.
Then when you think about it, what this group of bankers did--and I
call them speculators because they really weren't prudent bankers.
Mr. ELLISON. Bankers collect deposits and loan money to the
communities they represent and help people do what they need to do.
Ms. KAPTUR. What this group did was they actually have threatened the
entire system of capital formation in this country because they have
disrupted the measurement of value at the local parcel level. So our
normal system of recording deeds and value in Minnesota, in Ohio, was
thrown out the window as they went to the MERS system, the electric
registration system.
Mr. ELLISON. Right.
{time} 1300
Ms. KAPTUR. They went over the heads of all of our local property
recording offices, our titling offices. That is at the heart of
capitalism, itself. You would think there would be a roar out of other
economic interests in this country, saying, Hey, you fellows, you
almost brought down capitalism. You almost brought down the whole
market economy.
And they actually did if you see the damage still rippling through
this country. Yet they're not being prosecuted? Think about that.
Mr. ELLISON. I'll tell you, it's all sort of an interlocking mess. I
mean, we've been told since the days that Milton Friedman first hit the
scene that regulations were a problem in our economy and that having
rules to protect health and safety and fairness simply were disrupting
the market and that we needed to get rid of these job-killing
regulations--what our Republican friends called them all the time--
rather than commonsense protections to protect people.
So we got rid of those things. We didn't enforce the laws that we
already did have. We shrank government to the point where, because we
didn't want to pay any taxes, government couldn't even afford itself,
so we didn't have the people to make sure that consumers were being
treated fairly, that mortgages were fair and that rules were being
abided by. Then, as the technology and everything changed, we weren't
able to change regulation so that it would keep up to date with the
necessity of the market.
What I have in mind now is an heroic figure named Brooksley Born, who
tried to tell them that this OPEC ``insurance'' market--I put
``insurance'' in quotes--this credit default swap market, needed to be
regulated. Instead of regulating it, we actually passed a bill in 1999
that it would not be regulated. Then as a result, when the music
stopped in 2008, we were at the mercy of--what?--$54 trillion.
Ms. KAPTUR. When that bill was passed, I would venture to say 99
percent of the Members of Congress didn't even know it was in there
because it was buried in an omnibus appropriations bill. Nobody even
knew it was in there. So that was sort of the final
[[Page H676]]
straw that broke the camel's back. I wanted to say to the gentleman
that I'm sure in Minnesota--and you can verify this for me--just like
in Ohio, business after business tells me, Marcy, we can't get a loan.
Mr. ELLISON. Oh, yes. That's right.
Ms. KAPTUR. The normal banking system isn't working, and what they're
trying to do at the Federal level is to focus attention just on the
secondary market activity rather than on the loan originators. So
they're saying, Oh, the problem was at Fannie Mae and Freddie Mac.
Fannie Mae and Freddie Mac were the second in line.
Mr. ELLISON. Right.
Ms. KAPTUR. The first in line were the originators, the very
institutions we're talking about here: Citicorp; Bank of America;
Goldman Sachs is now involved in that; Wells Fargo; HSBC; UBS. It's all
these institutions, and they originated through their intermediaries,
like Countrywide, which was involved. When the bad loan was made, they
then sold it to the secondary market. So now most of the prosecution
has been of the secondary market activities, which really soured in
about 2007, 2008, but the real perpetrators started well over a decade
earlier. That's where we need to go----
Mr. ELLISON. Yes.
Ms. KAPTUR. Which is to the originators who created the schemes that
allowed, as you say, the lid to be blown off the regulation of
derivatives and of these fancy schemes.
Right now, yes, we're trying to get ahold of the secondary market
activity, but they only received the ball from the original passer--I
call them the ``coach''--the ones who were actually developing the game
plan, and you have to go back a decade. That's why we need robust
prosecution at the FBI.
Mr. ELLISON. Absolutely.
Does the gentlelady have any more news to report about the
settlement?
Ms. KAPTUR. All I know is that it's big news and that we're receiving
it well. It's an important first step. I think it's like somebody just
hit a solid first base hit, and we've got some other bases to go around
until we get to home plate.
I really want to thank the gentleman very much for allowing me time
today as we try to repair the Republic. This is a very helpful step. I
want to thank the Obama administration and wish them on to do even
better. Let's get those agents hired. I hope the President's budget,
when it comes up here, will allow us to hire 1,000 agents at the FBI in
order to get this job done, not just in the secondary market, but to go
after the originators.
Mr. ELLISON. If the gentlelady has just a few more minutes, if I may,
I would like to pose one more question.
Ms. KAPTUR. Please.
Mr. ELLISON. We've heard that we've had about 23 months of private
sector job growth. In January, the job growth numbers were very good,
and we're happy to receive those. Unemployment has ticked down to about
8.3 percent, so it looks like the trajectory of the economy is going in
the right direction.
But, until we address this housing problem, will we still have a drag
on the economy?
Ms. KAPTUR. I am so happy the gentleman has asked that question.
I have served on the Housing committees for my entire career in
Congress. There has been no modern recovery in our country that has not
been led by housing development. If you talk to Realtors, if you talk
to homebuilders, you'll see how poor that market is right now. We have
to fix the housing sector.
On the part of the majority here, there haven't been any serious
hearings on this. Have we gone out to the country? We used to go out to
the country. When there is a crisis, you go out to the country. If
Louisiana loses part of its southern edge, we go down there. We try to
help. We try to figure out what's going on. On this housing problem,
there has been such timid action, almost no action, by this Congress.
We've just let it fester and hemorrhage across the country.
History will show this was one of the most irresponsible periods that
damaged our housing stock from coast to coast, and we will be paying
for it for years to come--in shattered lives, in shattered communities.
If I chaired the committee, we'd be all over the country. We wouldn't
be sitting here in Washington doing nothing. We would be going out to
these communities.
Mr. ELLISON. Our Republican friends, who are in the majority, they
tell us: Let laissez-faire capitalism take over. Let the housing market
bottom out. Government shouldn't do anything. Just let all home value
go down to nothing, and eventually somebody will buy those houses that
are just sitting there, idle, after people have been unemployed and
can't afford them and have to be foreclosed on. They tell us we should
just be laissez-faire with that. They also tell us that we should not
put any regulations in place and that we should cut taxes so that the
government doesn't have enough revenue to protect the people.
To me, this crisis seems like the product of a philosophy--that the
rich people don't have enough money and that the poor have too much.
This seems like a culmination of a philosophy that for the people,
through their democratic institutions to hold business accountable, to
play fairly and by the rules, has seen its full manifestation. The full
manifestation of this Ayn Rand-type philosophy has brought us to
financial ruin, and they won't even admit that.
We haven't seen any hearings on how to address the foreclosure
crisis, because they believe in just letting the market bottom out. I
mean, even though there have been 23 months of private sector job
growth, you never hear them say anything good about that; and while
we're adding private sector jobs, they're trying to cut public sector
jobs.
What is really going on here? Why isn't our majority addressing the
jobs crisis? Their jobs program seems to be to attack the EPA. They're
basically making the case that Americans who want to breathe and drink
clean water are the problem of our economy. What is this laissez-faire
get the government out? no taxes for the rich? What has this philosophy
brought us to?
Ms. KAPTUR. I would say to the gentleman that I think what it has
brought us to is of only being for the 1 percent because, if you look
at what is going on, they have the big banks confiscating private
property. In other words, where people had equity, they took it away;
right? People walked away from their homes. They didn't get legal
advice. They had a leg to stand on, but they were so afraid that
ordinary families just walked away from their homes, and many of them
could still be in their homes. So they're confiscating private
property. Then, at the Federal level, they want to take and cash out
public property that belongs to the American people: in our parks--
right?--and in our lands. Think about what they're talking about.
{time} 1310
So a few want it all. And we're saying, that's not what America's
about. America is about everyone--we, the people, all of us. Not just
the few, but about the 99 percent, not just the 1 percent.
But when six banks control two-thirds of the wealth of this country,
that's something to be worried about because it's too much power in too
few hands.
Mr. ELLISON. I thank the gentlelady.
Madam Speaker, may I inquire how much time remains?
The SPEAKER pro tempore (Ms. Buerkle). The gentleman from Minnesota
has 7 minutes remaining.
Mr. ELLISON. Well, let me wrap up.
All I would like to say, Madam Speaker, is that the Progressive
Caucus looks at an America where the American Dream was of liberty and
justice for all. And when those words were written, we had a society
where only part of our society was legally allowed to fully
participate. Women couldn't vote. Blacks couldn't vote. But people who
believed in the dream of America wanted to make progress and fought to
make sure that women and people of color could vote in this country.
And people looked at that American Dream and said, You know what, we
have a dream of a big middle class, broadly shared prosperity. And even
though the society may not have quite been that way at that time, they
worked to fulfill that promise, that dream, the American Dream, an idea
that good Americans pursued and helped to bring into fruition.
[[Page H677]]
We are trying to make progress on the dream, the progress of full
inclusion, full employment, respecting our environment, believing in
science. This is what the Progressive Caucus is all about. We're not
trying to conserve the old way where only some people had privilege and
opportunity. We're trying to make progress. So this is what the
Progressive Caucus is all about.
The Progressive Caucus believes, of course, there should be a free
market in America; but there also needs to be a public sector that will
watch out for the health, safety, and fairness of our country. Yet some
people in Congress are hostile to the idea of any government role, but
we're not. We believe that government is how we come together in ways
that we can't do it alone, for the best benefit of everybody.
And we urge the Republican majority--they've got the power; this is a
winner-take-all-type system--to go out across American and do something
and hear people about the issue of foreclosure, to get some jobs going.
Pass the American Jobs Act. Pass the infrastructure bank bill. Do
something to get this country together. Address the foreclosure crisis.
Stop whipping up Americans versus Americans, using loaded terms like
``food stamp President,'' which is racial code. Stop blaming the gay
community for failures in people's marriages. It's not their fault.
Stop heaping hate and scorn on new Americans, and stop trying to
relegate women to second-class citizenship.
Let's embrace the fullness of what it means to be an American. Let's
make progress on the American Dream. Let's embrace the progressive
message.
And I just want to say, Madam Speaker, I yield back the balance of my
time.
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