[Congressional Record Volume 158, Number 170 (Sunday, December 30, 2012)]
[Senate]
[Pages S8521-S8527]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
The Fiscal Cliff
Mrs. BOXER. Mr. President, as we stand here--or sit here--and watch
what is happening, we know there are negotiations going on to avert at
least part of the fiscal cliff. I want to say--I have said this
privately, but I want to do it publicly--I hope our leaders can find a
way out of this.
I watched the President speak today and I thought, as usual, he was
very fair in what he said. What he basically said is it is the middle
class that grows this economy. It is the middle class that needs to be
lifted up. It is the middle class that cannot afford tax hikes. Those
at the very top can do just a little bit more.
It is a very simple point. I hope, given that everyone says they are
for the middle class--I know my colleagues on the other side of the
aisle say that every day, that they agree with that--that finding this
compromise will not be elusive but will come to pass.
I have been here for a while. My understanding is we have not met
between Christmas and New Year's Day since 1962. So it does take a
crisis of major proportions to make that happen. I think we are in a
crisis right now, but it is a self-made one. It is a self-imposed one.
It is similar to the crisis we had on the debt ceiling--self-imposed.
It is not some, God forbid, exterior attack on our country which we
[[Page S8522]]
could not prevent. It is not some, God forbid, plague or a terrible
virus that is running across the land. To me it is something that is
not that complicated.
As the President said, we have a series of tax cuts that are
expiring. If we let them expire, it means there will be a huge tax
increase, mostly hitting the middle class and the working poor. The
upper incomes, the people in that category, have done so well that even
they say they would have to talk to their accountant before they even
knew there was any impact on their tax bill. So we can come together.
The President favored a limit which would be $250,000, meaning that
everyone who earns up to that would get a tax break. Everybody's income
up to $250,000 gets a tax break, everybody, 100 percent of the people.
But those who are fortunate to have higher incomes would go back to the
tax rates that prevailed when Bill Clinton was President.
Why the other side is horrified by that is perplexing to me. I look
back at the Clinton era. I was here. That is a long time ago. I came to
the Senate with Senator Feinstein when Bill Clinton was President, and
he faced similar issues in that we had a deficit that was getting out
of control, a debt that was getting out of control. We needed to have
growth. So he put forward a budget plan that invested in our people,
invested in the infrastructure, invested in education, and at the same
time said we can find cuts in other areas and we can raise taxes on
those who are doing very well.
What happened with that fair and balanced approach? What happened was
the greatest prosperity in modern history--23 million jobs, no more
deficits, we got to a balanced budget. I remember saying to my husband:
My goodness, what is going to happen? There will not be any more U.S.
Government bonds because we are going to be out of the debt situation.
We saw it on the horizon.
When George W. Bush became President, he decided to go back, backward
on rates across-the-board, from the wealthiest to the middle to the
poor, and he put two wars on a credit card and we are where we are.
To add to this history, we all know we are coming out of the worst
recession since the Great Depression. It has been difficult. It was led
by, unfortunately, some unscrupulous people on Wall Street who created
a nightmare in the housing market. I remember saying to Treasury
Secretary Paulson: Can you please explain the role of derivatives here
and what happened and how we got into this crisis? He put his head in
his hands and he said: Not now. I will talk to you later.
That is not very encouraging when the Secretary of the Treasury puts
his head in his hands and says I can't explain it now.
We are coming out of this difficult time, and guess what. We are
doing much better. We had an election. It was pretty clear. People want
to see us reach a balance.
As I stand here, I know there are negotiations going on in the rooms
surrounding us. I wish for the best, I hope for the best, and I ask for
the best. There is a word called ``compromise.'' It doesn't mean you
compromise your principles, but it means that you can compromise
because that is what the American people want us to do. Yes; they do.
I wish to give an example. Say you were out hiking. Mr. President, in
your State there are a lot of hikers. If you saw someone on a cliff,
trapped, caught on a rope and you knew the only way to save the person
was first to cut the rope--you are standing with someone else and you
say: Cut the rope at the top. He says: Cut the rope at the bottom, and
you stand there arguing; meanwhile, the man is struggling on this
cliff: Get me down. Wouldn't it be smart to cut the rope in the middle
and save the guy? You can argue later, should I have cut the rope at
the top or the bottom--no, cut it in the middle, save the man.
That is a pretty simplistic example of where we are. But I have the
privilege of knowing we can get it done when we work together. I was so
proud to bring to this Senate a highway bill, a transportation bill.
Millions of jobs were at stake. Our States were worried they would stop
getting their highway funds. We would have had to stop road projects in
the middle. We would not have had State funding for transit. But you
know what happened. Senator Inhofe and I sat in a room. You could not
find two more divergent people in their thinking, he a conservative
Republican and I a progressive Democrat. We sat in a room and he said I
want this, this, and this. I said I want that, that, and that. Then we
said let's make a deal. Let's meet in the middle. We did it--much to
everyone's surprise--and that bill passed the Senate.
When it got to the House, it got stuck. So Senator Inhofe and I and
Senator Reid went over to meet with John Boehner and Chairman Mica and
we all agreed we would get it done. Neither side got everything they
wanted. Anyone who takes that position, in my opinion, is not putting
country first. I don't care whether they are Republican, Democrat or
anything else.
We are not, each of us, going to get everything we want, Lord knows.
There is a lot I could do if I had a wand and could make it happen. But
everybody has a different view of exactly how to go forward. I think we
are being tested.
I know it is tough going. I know if we do not get a deal, it does not
stop there; we will keep on working. But there is no reason on this
beautiful, God's green Earth why we cannot get a deal. If everyone is
sincere and saying they want the middle class to be protected, we can
get a deal. President Obama says $250,000 is the line. Maybe I think
$350,000 is the line; maybe someone else, $500,000; maybe someone else,
$150,000. We can meet somewhere and cut that rope somewhere in the
middle and save this country from the uncertainty that plagues us right
now.
In the olden days--when I say ``olden,'' it is a long time ago--I was
a stockbroker. I was an economics major and a stockbroker on Wall
Street. The thing Wall Street and investors cannot take is uncertainty.
If they know taxes are going up, they will refigure things. If they
know taxes are going down, they will refigure things. If they know
taxes are staying the same, they will figure it out. But right now they
are frozen because they do not know. Families are also, in many ways,
frozen. They do not know whether they have to budget so they will have
$2,000 less next year. They do not know whether it will be $4,000. They
don't know if it is ever going to change. The uncertainty is the fault
of leaders who cannot get together. I think it is critical that we get
a deal, and I hope it is in the next couple of hours.
I believe it was a reporter who asked me: What is the difference if
it is done now or 5 days from now?
I said the difference is this uncertainty, this pall, and an unneeded
escalating crisis.
Then someone might say: Well, we don't have to do it now. We will do
it on January 4. Well, we don't have to do it on January 4; we will get
it done on the 10th.
We need to get it done. America wants us to get it done.
The President has shown that he is willing to be flexible. He has
come out with some ideas that I have to swallow--very hard--to accept.
I know personally how strongly he feels that $250,000 should be where
we draw the line when we allow tax breaks, but he was willing to offer
$400,000. He was willing to look at changing some of our programs. It
is very tough for him to do that, but he is willing to do that even
though he ran on his program and won by millions of votes on his
program.
So if the President can be flexible and say: OK, I will step back
from everything I really want to do and move in the direction of the
Republicans, then the Republicans need to move in our direction. I
think we are going to be judged by whether we are going to be stuck in
the mud because we just don't have the courage to change or whether we
step forward at this moment. I think it should be this moment.
If we cannot get it done, I certainly hope we will have an up-or-down
vote on the President's plan, which I feel was very fair. The President
offered a plan. Do I like everything about it? Absolutely not. But he
showed he is willing to take those steps. I would hate to think our
colleagues would filibuster that and demand a 60-vote threshold as we
go over this cliff.
The American people are hanging from the cliff, and we can let them
[[Page S8523]]
down very gently today and solve this problem. If all we do is stand
and stay in our corners, I am very fearful the message is that we don't
know how to meet each other halfway, and that is not a good thing.
Voters are going to turn on those people who stand in their corners and
don't move. That is not the role of legislators.
I will close with this. We have a different form of government than
they have in Europe. This is not a parliamentary system. In a
parliamentary system, one government rules everything, one party rules
everything. They have the Prime Minister, the equivalent of the
Speaker, and the leader all in one party, and then they don't
compromise. They put their agenda there and get their program through.
If there is a lack of confidence, the people can change parties. The
next party then comes in and does what it wants. That is not what we do
here.
Sometimes I wish it were the form of government we had because at
least there would be some action and we would know what to expect. We
would not have this uncertainty because each party has its dreams, its
hopes, its plans, and they would have a chance to get those policies
through. We don't have that here. We have to meet each other halfway
because the House is run by the Republicans, and it will be next year.
The Senate is run by the Democrats, but it is not a supermajority. We
have to deal with our colleagues. The President is a Democrat. We have
to work together. That is the name of the game.
If I can work with Jim Inhofe on the highway bill and Debbie Stabenow
can work with Pat Roberts on the farm bill--and there are other
examples I could give. For instance, Senator Feinstein worked with her
Republican counterpart. I could give many examples on the
Appropriations Committee. We know we can do this. We just have to take
a deep breath and put our egos aside for this country's sake and make
those compromises that allow us to still stand tall. I am only 5 feet,
so that's hard, but you get the point.
We can do this, and we should do it now. If we don't do it now, we
should vote on the President's plan because the people of this country
deserve better than to be left hanging on a cliff. They don't deserve
that. It is not right.
Thank you very much.
I yield the floor, and I note the absence of a quorum. I ask that the
time be equally divided between the two sides.
The ACTING PRESIDENT pro tempore. Without objection, it is so
ordered.
The clerk will call the roll.
The assistant legislative clerk proceeded to call the roll.
The ACTING PRESIDENT pro tempore. The Senator from Georgia.
Mr. President, I ask that the order for the quorum call be rescinded.
The ACTING PRESIDENT pro tempore. Without objection, it is so
ordered.
Mr. ISAKSON. Happy New Year, Mr. President.
Mr. President, I rise to speak about the nominee for Commissioner of
FHA, Carol Galante. I opposed her nomination earlier in the year
because of some concerns about what the FHA may or may not do; however,
I had no concern whatsoever about her qualifications or ability. She is
coming up in the second vote today, and I want to put on the record my
wholehearted support for the Senate reaching the 60 votes necessary to
confirm her appointment, and I want to explain why.
There are some people in the Chamber who justifiably have concerns
about the FHA, its liability on insurance and the fact that it is
bearing so much of the burden on housing finance. But that is not the
FHA's fault, that is the fault of Dodd-Frank. The restrictions on
lenders would have forced FHA to be the lender of last resort--or most
resort--for most American people. That is something we in the Senate
have the ability to fix, but we should not punish a talented,
experienced, well-qualified, and highly recognized individual who knows
housing, both multi and single family, from being Commissioner of the
FHA.
So I rise to say to any Member that if they have a problem with the
FHA, don't take it out on Ms. Galante. Look at what happened after the
passage of Dodd-Frank and the fact that the FHA had to take on the
burden because there was no other alternative in housing finance. What
we need to do, rather than defeating good nominees for office, is give
those nominees the kinds of underpinnings where the laws allow capital
to flow to the mortgage market through various and numerous entities so
the whole burden doesn't have to be borne by the FHA and the U.S.
Government.
I rise with pleasure to say I will vote in favor of Carol Galante as
Commissioner of the FHA.
I yield the floor.
The ACTING PRESIDENT pro tempore. The Senator from Tennessee
Mr. CORKER. Mr. President, I rise to speak behind the distinguished
Senator from Georgia. He has more experience in the housing market than
any Senator in the Senate and always speaks with eloquence and balance.
I would like to second what he said.
I spent a lot of time with the nominee, Carol Galante. She is
technically very proficient. Over the past 2 weeks she has put in place
reforms that are very strong. It is just a start. I know a lot more
needs to happen at FHA, but she has put in place some very significant
reforms.
I know we have been losing billions of dollars at FHA--and I think
seniors have been taking advantage of it--on something called a full-
draw fixed-rate reverse mortgage. The advertisements for that have been
on TV. The FHA has been losing its shirt over that program. She ended
that program--or will end it by the end of January--on her own, along
with doing some other things relative to debt-to-income. That is one
example of why I think she is technically very proficient.
I know there are Members of this body today who may work against her
because they are very dissatisfied with what has been happening at FHA.
Candidly, much of that is due to us. We need to pass some legislation
to deal with FHA, and we have been resistant to do that. I know Johnny
Isakson, David Vitter, and others in our body have been pushing for us
to address that. I know the Presiding Officer serves on the Banking
Committee with me, and we know reforms need to take place.
Here is what I would say. The main reason FHA is in the problem it is
in is due to loans that were made back in 2006, 2007, 2008, and the
beginning of 2009. What is happening is that the losses from those
loans are just now kicking in. There is no question that FHA has some
issues relative to their economic value, but there have been five
increases in rates at FHA recently to try to get it back to where it
needs to be.
So what I would say to my friends on this side of the aisle is that
if we think the FHA can get better by not having a Commissioner, I find
that to be kind of strange. She has been the Acting Commissioner since
David Stevens left. It seems to me we would be much better having
somebody in that position who is actually accountable and able to bring
permanent staff with her. They know the issues that are going to need
to be dealt with at FHA.
Again, I think I have spent about as much time with her as anybody in
this body. I know Senator Isakson has done the same. I find her to be
very technically proficient. Over the last few weeks I have seen her do
some bold things relative to the debt-to-income ratio with some of the
FHA participants. We need to do something about the loan amounts at
FHA. They are at 729 now. At some point, they probably need to drop
down once we get the rest of the market working in the fashion it
should be.
I wholeheartedly support her in this position. There is a lot of work
that needs to take place at the FHA. I think she is somebody who has
the ability to carry that out. The biggest issue with FHA right now is
this body and the folks down the hallway. We need to pass legislation
to deal with overall housing finance. I know Senator Isakson from
Georgia is going to be very involved with that. I hope to be involved,
and my guess is the Presiding Officer is going to be involved as well.
My sense is that we need to have someone who is running the FHA to
help it to work better. I hope my colleagues on this side of the
aisle--hopefully many of them--will join in giving her strong support
today and work closely with her to help the FHA to be the kind of place
it ought to be. I agree with the Senator from Georgia in that
[[Page S8524]]
it should not have the market share it has today, but a big part of
that has to do with our inaction in this body and our inability to thus
far deal with GSE.
I hope many Members will join in supporting Carol Galante.
I yield the floor.
The ACTING PRESIDENT pro tempore. The Senator from California
Mrs. BOXER. Mr. President, how much time remains on this side?
The ACTING PRESIDENT pro tempore. Thirteen minutes for the majority.
Mrs. BOXER. Will the Presiding Officer let me know when I have talked
for 4 minutes.
The ACTING PRESIDENT pro tempore. The chair will let the Senator
know.
Mrs. BOXER. Mr. President, I wish to thank Senator Corker for his
remarks and join in with his support for Carol Galante. She has a long
and distinguished career of building and promoting affordable housing,
and she is very well qualified.
She began her career as a housing coordinator for the city of Santa
Barbara, rising to become the city's housing and redevelopment manager.
I want to point out that Santa Barbara is a magnificent part of my
State. I have a beautiful State. At the time, they didn't have much in
the way of moderate-income housing, and that was part of the very
important work she did.
She moved on to Eden Housing, a nonprofit affordable-housing
developer, where she developed over 400 homes as a project manager. She
eventually took over as executive director.
She later joined BRIDGE Housing as vice president, and in 1996 she
took the helm of that organization as its president and chief
executive. BRIDGE is the largest nonprofit developer of affordable-
income and mixed-use developments in California. While she was there,
Carol oversaw the creation of 13,000 affordable homes for more than
35,000 Californians and programs that helped one-fourth of their
residents advance to home ownership because she knew that was the goal.
Home ownership, even after all we have been through, is the dream, and
she understands that.
So in 2009, President Obama appointed Carol as HUD's Deputy Assistant
Secretary for multifamily housing programs where she oversaw a $50
billion portfolio of affordable and market rate multifamily properties
through FHA's multifamily insurance program. At a time when support for
housing was desperately needed, she took a smaller staff and grew
annual lending from $2.5 billion to over $10 billion.
Carol has served for a year now as Acting Commissioner for FHA where
she has worked to weed out bad lenders, ensuring greater stability of
the reverse mortgage program, and increasing counseling resources for
borrowers. As we look over what happened in the housing sector, we know
people bought homes who shouldn't have bought homes, lenders took
advantage of them, and everybody was in the mix in terms of why things
went so sour.
Carol's accomplishments have been recognized through numerous honors,
including inductions into the Hall of Fame for Bay Area business
leaders in California. She has been recognized by California Home
Building and the California Housing Consortium. So she gets support
from everybody--from the builders, from the homeowners, from the
renters.
Carol has the strong support of a broad coalition of housing
advocates and lenders. I ask unanimous consent to have printed in the
Record a letter from the Mortgage Bankers Association and a letter from
what looks to be two or three dozen other housing organizations.
The ACTING PRESIDENT pro tempore. Without objection, it is so
ordered.
There being no objection, the material was ordered to be printed in
the Record, as follows:
July 26, 2012.
Hon. Harry Reid,
Majority Leader, U.S. Senate,
The Capitol, Washington, DC.
Hon. Mitch McConnell,
Minority Leader, U.S. Senate,
The Capitol, Washington, DC.
Dear Leaders Reid and McConnell: The members of the
Mortgage Bankers Association, the National Association of
Home Builders, and the National Association of Realtors wish
to offer our continued support of the nomination of Carol
Galante to be Assistant Secretary for Housing and Federal
Housing Administration (FHA) Commissioner at the U.S.
Department of Housing and Urban Development (HUD).
FHA continues to play a critical role as the overall
housing market struggles toward recovery. FHA is especially
vital to homebuyers who may need a little ``extra help''
securing safe, decent, and affordable housing, focusing more
on the needs of first-time, minority, and low- and moderate-
income borrowers than any other national program. At present,
approximately 77 percent of FHA-insured home purchase loans
are made to first-time homebuyers, and 31 percent of these
first-time homebuyers are minorities.
FHA has also played an important role in the financing of
multifamily rental housing, which has enabled the
construction and rehabilitation of needed affordable rental
units, as private market sources of capital have not been
available. Since FY2008, FHA's commitments in multifamily
loans grew from $2 billion to $13 billion in FY2011. Because
of its essential role in the current housing marketplace, FHA
must have a seasoned leader to direct its mission at this
crucial time in all geographic areas of the country.
Carol Galante will bring tremendous expertise and a deep
commitment to strengthening FHA's program areas to the post
of Commissioner. Her decades of work in affordable housing
development and more recently, managing FHA's multifamily
programs, give her a unique perspective on the issues facing
our nation's housing and mortgage markets. This experience
and practical understanding will serve her well in this new
position.
Our organizations are eager to continue working with Ms.
Galante in this capacity when she is confirmed, and we are
pleased that the Senate reached an agreement to consider her
nomination next week. We hope that the full Senate will
approve her nomination when it comes to a vote. Thank you in
advance for your consideration of these views.
Sincerely,
Mortgage Bankers Association.
National Association of Home Builders.
National Association of Realtors.
____
November 16, 2011.
Hon. Tim Johnson,
Chairman, Committee on Banking, Housing & Urban Affairs, U.S.
Senate, Dirksen Building, Washington, DC.
Hon. Richard Shelby,
Ranking Member, Committee on Banking, Housing & Urban
Affairs, U.S. Senate, Dirksen Building, Washington, DC.
Dear Chairman Johnson and Ranking Member Shelby: The
undersigned organizations strongly endorse the nomination of
Carol J. Galante as Assistant Secretary for Housing/Federal
Housing Commissioner. We believe her tenure as Acting
Commissioner, Deputy Assistant Secretary for Multifamily
Housing and her 31-year long private sector real estate
experience has prepared her well to be the Assistant
Secretary. We urge you to approve her nomination.
As Acting Commissioner, Ms. Galante already has had several
impressive achievements. She spearheaded a major overhaul of
the HUD Housing Counseling Program, including establishing
the new Office of Housing Counseling. The changes to HUD's
Housing Counseling Program will improve effectiveness, better
target resources to maximize efficiency and ensure that HUD
grant funds achieve maximum impact in the communities where
they are invested.
She also prioritized a global review of the Home Equity
Conversion Mortgage (HECM or reverse mortgage) program,
including issuing guidance to the industry on the use of
borrower financial assessments and analysis of other
potential changes to ensure the long-term stability of this
important program.
As the nation contends with the foreclosure crisis, Ms.
Galante has ensured that taxpayers are protected from waste,
fraud and abuse by holding lenders accountable for non-
compliance with the Federal Housing Administration's (FHA)
requirements. This included the November 1, 2011 suspension
of Allied Home Mortgage Corporation and its President; the
withdrawal of 11 lenders from FHA's program and the
imposition of more than $1.5 million in civil money penalties
on non-compliant lenders.
Lastly, she oversaw the publication of two significant
Mortgagee Letters that outline changes to FHA's requirements
for lenders, making FHA programs work more effectively for
FHA's lender partners.
Prior to becoming Acting Commissioner, she led the
Multifamily Housing Division of FHA, with 1600 employees and
53 field offices. Ms. Galante was responsible for a $50
billion portfolio of affordable and market rate multifamily
properties through the FHA Multifamily Insurance Program, as
well as the administration of the $9 billion Project Based
Rental Assistance Program and the 202/811 grant programs for
elderly and disabled housing.
And before she began her federal service, she was President
and Chief Executive of BRIDGE Housing, California's largest
non-profit housing development corporation, and its affiliate
companies. This included overseeing a Property Management
company, an economic development corporation, senior
[[Page S8525]]
services and land development. BRIDGE is widely known as a
leading practitioner using the best private sector business
practices and entrepreneurial ideas to build affordable homes
and apartments in a wide variety of communities.
As the nation's housing market remains fragile, we need Ms.
Galante's demonstrated experience at FHA to provide
leadership on and practical solutions to America's housing
challenges. We urge you to approve Ms. Galante to take on
this challenge.
Sincerely,
Affordable Housing Tax Credit Coalition; Center for
American Progress Action Fund; Center for Responsible
Lending; Consortium for Citizens With Disabilities Housing
Task Force; Corporation for Enterprise Development;
Corporation for Supportive Housing; Council of Large Public
Housing Authorities; Council of State Community Development
Agencies; Enterprise Community Partners, Inc.; Habitat for
Humanity; Housing Assistance Council; Housing Partnership
Network; LeadingAge; Local Initiatives Support Corporation;
Low Income Investment Fund; McCormack Baron Salazar; Mortgage
Bankers Association.
National Affordable Housing Management Association;
National Alliance on Mental Illness; National Alliance to End
Homelessness; National Association of Affordable Housing
Lenders; National Association of Housing & Redevelopment
Officials; National Association of Local Housing Finance
Agencies; National Community Reinvestment Coalition; National
Community Stabilization Trust; National Housing &
Rehabilitation Association; National Housing Conference;
National Housing Trust; National Leased Housing Association;
National Low Income Housing Coalition; Self-Help; Stewards of
Affordable Housing for the Future; The Community Builders;
Volunteers of America.
Mrs. BOXER. Mr. President, I wish to read from a letter the majority
and minority leaders received from the Mortgage Bankers Association,
the National Association of Homebuilders, and the National Association
of Realtors. These are the businesspeople, and this is what they said
about her:
Carol Galante will bring tremendous expertise and a deep
commitment to strengthening FHA's programs . . . Her decades
of work in affordable housing development and more recently,
managing FHA's multifamily programs, give her a unique
perspective on the issues facing our nation's housing and
mortgage markets.
So here we have a person who understands the business side, and she
understands the renters and the owners.
The ACTING PRESIDENT pro tempore. The Senator has used 4 minutes.
Mrs. BOXER. I ask for an additional 30 seconds, please.
The ACTING PRESIDENT pro tempore. Without objection, it is so
ordered.
Mrs. BOXER. So we have someone who understands the business side, the
renter side, and the home ownership side.
I am very proud this woman is a Californian. I know there are lots of
issues within FHA, and we all have to work on them, and we have heard
that from Senator Corker. But, my goodness, we want someone who can
work with us. She is the perfect person.
I yield the floor.
The ACTING PRESIDENT pro tempore. The Senator from Connecticut.
Mr. LIEBERMAN. I thank the Chair.
In a short while the Senate will vote on two nominees for service in
the executive branch of our government. I rise today to speak in
support of one of those two, which is William Baer, who has been
nominated to serve as Assistant Attorney General managing the Antitrust
Division of the U.S. Department of Justice.
I happen to have come to know Bill Baer personally because he
practices law in a firm with a very good friend and neighbor of mine
here in Washington, and in that regard I can certainly testify to the
fact that he is an honorable, interesting, enjoyable person. But that
alone doesn't qualify him to hold this high office. He has
extraordinary experience. I would say he is very widely acknowledged as
one of the best antitrust lawyers in our country. I would say this
nomination is really a merit selection nomination. I will get to that
in a minute.
Bill Baer graduated from Lawrence University and the School of Law at
Stanford University. He has served with distinction throughout his
career, earning accolades such as recognition as the Washington, DC,
Antitrust Lawyer of the Year by Best Lawyers, as well as one of the
decade's most influential lawyers by the National Law Journal.
He is currently head of the Antitrust Practice Group of a very
distinguished firm based in Washington, Arnold & Porter, and there he
draws on his 35 years of experience in civil and criminal investigation
to manage that firm's work in the areas of antitrust litigation,
international cartel investigations, and merger and acquisition
reviews.
In an earlier chapter in his life, Bill Baer served over several
periods at the Federal Trade Commission, rising from a trial attorney
during his first term there in 1975 to serve as assistant to the
chairman, then assistant general counsel, and between 1995 and 1999 as
Director of the Bureau of Competition.
Here is the point I think really speaks to the fact that Bill Baer's
nomination to head the Antitrust Division is nonpartisan and based on
his extraordinary capabilities. His nomination has received a letter of
support signed by 12 prior Assistant Attorneys General for the
Antitrust Division of the Department of Justice who served between 1972
and 2011, and these include people who have led the Antitrust Division
from President Nixon through Presidents of both political parties, to
President Obama. His nomination has also received a letter of support
signed by each chair of the Section of Antitrust Law of the American
Bar Association--those who have served as chair of that section between
1977 and 2011. So 29 of the most distinguished practitioners of
antitrust law from all around the country, all different political
persuasions, have written in support of this nomination.
I just wanted to take this opportunity to say it is an honor to not
just thank the President for this nomination but to thank Bill Baer for
being willing to leave a quite successful law practice to return to the
service of our country in an area that is critically important to our
free market economy in which he happens to be one of our Nation's
foremost experts.
So I hope my colleagues will support the nomination of Bill Baer when
it comes to a vote very soon this afternoon.
I thank the Chair, and I yield the floor.
The ACTING PRESIDENT pro tempore. The Senator from Alabama.
Mr. SHELBY. Mr. President, I wish to take a few minutes this
afternoon to explain why I will be opposing the nomination of Carol
Galante and why I encourage my colleagues on both sides of the aisle to
do the same.
This nomination is not one of the many ``go along to get along''
nominations we do so often in the Senate; this is a nomination that
will have a direct effect on our constituents' pocketbooks and it
demands, I believe, our serious attention today.
Carol Galante has been the Acting Assistant Secretary and Federal
Housing Commissioner at the Department of Housing and Urban Development
since July 2011. Therefore, this nomination vote, in a sense, will
serve as a referendum of sorts on the current management of the Federal
Housing Administration.
Ms. Galante, in her role as Acting FHA Commissioner, has failed to
take serious actions to shore up the solvency and prevent a taxpayer
bailout of the Federal Housing Administration that we know as FHA.
The latest actuarial report shows that FHA has a negative economic
value, and a taxpayer bailout is most likely. Despite these warnings,
FHA waited until April 2012 to raise additional premiums, and Secretary
Donovan, the Secretary of HUD, has testified to the Senate Banking
Committee that it will wait until next year to increase premiums by a
meager 10 basis points despite having statutory authority to do more to
protect the taxpayers.
Ms. Galante has denied the true severity of the problems at the FHA.
In a New York Times piece last year, Ms. Galante said: ``[there] is no
evidence or widespread prediction that home prices are going to decline
to the kind of levels'' that would require a bailout.
Really? Yet although some prices have risen slightly, the FHA's
financial position continues to deteriorate. Several experts now
conclude that a taxpayer bailout is simply a matter of time.
The 2012 actuarial report and the disastrous state of FHA's finances
led the Washington Post editorial board to conclude:
Right now the critics are starting to look pretty
prescient. . . . Affordable possession of one's own home is
the American dream. Government support for excessive
borrowing has turned into a national nightmare.
[[Page S8526]]
The FHA's capital reserve is still well below the level determined by
Congress to be the bare minimum to cover FHA's future losses. Even
though FHA narrowly avoided a bailout this year, dangers remain in the
years ahead due to its over $1 trillion exposure to risky loans and
precarious economic conditions.
Most of the FHA's recent actions have only concealed these dangers.
For example, instead of adequately raising insurance premiums over the
life of the loan, FHA has increased upfront premiums to simply cover
losses in the short term. Also, upfront premiums can be rolled into the
mortgage principal balance, thereby decreasing equity for borrows who,
in most cases, have little equity to begin with. Increasing the upfront
premiums could make FHA loans even riskier for both the borrower and
the taxpayer who stands behind the mortgages.
I believe it is time to face the reality that the Federal Housing
Administration is dangerously undercapitalized, and because of the lack
of serious reform FHA teeters on the brink of a bailout, as I have
said.
Andrew Kaplan, a New York University economics professor said:
They [the FHA] are doing very badly . . . there's no two
ways about it. Over the next five years, there won't be
enough of an economic recovery to fix FHA's finances. Not a
chance.
A study by a Wharton professor estimates that an FHA bailout could
cost between $50 billion and $100 billion and warned that only a
``quick and substantial economic and housing market recovery'' can
avoid ``substantial losses for the American taxpayer.''
Data from the actuarial report shows that the serious delinquency
rate for all FHA loans is 9.6 percent. The delinquency rates for loans
originated in 2006, 2007, and 2008 are between 20 and 30 percent.
Approximately 739,000 loans are seriously delinquent, an increase of
over 100,000 loans from last year. If the borrowers of these delinquent
loans all default on their mortgages, it would result in $57 billion in
claims to the FHA. We hope that would not happen.
The FHA's latest quarterly report shows capital resources of $32
billion. It also states that cash flow from operations, which largely
consists of premium revenues, covered only 80 percent of net claims
last quarter.
The latest actuarial report in 2012 confirms that FHA's finances are
dramatically worse than last year.
FHA's capital ratio has gone negative for the first time since 1991,
and economic value is in excess of negative $16 billion. Last year the
report projected a $9.4 billion value, representing a decline of $24.9
billion.
FHA's delinquencies continue to rise and continued high loan limits
keep FHA's role in the market very broad. The projected loss on
outstanding business is at an all-time $39 billion.
FHA is leveraged at 422:1--422:1--and has a sparse $2.55 billion
equity cushion on its over $1 trillion portfolio. Think about it. FHA
has underestimated its loan losses every year for the past 3 years.
In addition, since the Treasury Department already has so-called
permanent and indefinite authority to provide funding for the FHA, a
bailout of the FHA could occur without, as the Presiding Officer knows,
any congressional vote. This is not a vote today to determine whether
we support the President. This is also not a vote to determine whether
we can vote in a bipartisan manner. I think this is a vote to determine
whether we support the American taxpayer.
I believe Ms. Galante has demonstrated her inability to identify the
multitude of problems at the FHA, and I believe it is incumbent upon
us, on behalf of the American people--the taxpayers--to reject this
nomination and demand real reforms at FHA and a nominee who represents
and appreciates the urgency of this situation and a willingness to
address it.
Mr. President, I yield the floor.
The ACTING PRESIDENT pro tempore. The Senator from Tennessee.
Mr. CORKER. Mr. President, very briefly--I know the Senator from Ohio
wants to make some comments--I very much enjoy working with the Senator
from Alabama. He has been outstanding on the Banking Committee, and I
agree with almost every criticism he has made regarding the FHA. As a
matter of fact, we have stood together trying to cause the housing
industry to work much better than it is for not just those trying to
purchase homes but, obviously, the American taxpayers to whom he just
alluded.
But I wish to also point out something that was just said. One of the
main reasons the FHA is in the problem it is in is the loans that were
made in 2006, 2007, and 2008--long before this nominee was there. I
agree this nominee needs to be more aggressive in making changes, and I
agree that, even more so, this Congress needs to be more aggressive in
making changes.
I ask unanimous consent that a letter from the nominee to myself
regarding reforms that are being implemented between now and January 1
be printed in the Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:
Department of Housing and
Urban Development,
Washington, DC, December, 18, 2012.
Senator Bob Corker,
Dirksen Senate Office Building,
Washington, DC.
Dear Senator Corker: Thank you for commitment to the health
and stability of the Federal Housing Administration (FHA), as
expressed most recently at the December 6, 2012 Senate
Banking Committee and through your proposed amendment
designed to strengthen and protect FHA's Mutual Mortgage
Insurance Fund. Secretary Donovan and I share your concerns
and I am committed to continuing to take aggressive action to
rebuild the reserves of the Mutual Mortgage Insurance Fund,
which have been so negatively impacted by the legacy loans
insured by FHA--particularly those from the 2007-2009
vintages.
As you know, the actions we have taken to date, including
those recently announced in our Annual Report to Congress,
are designed to increase recoveries from this legacy book,
price risk appropriately on new loans, and begin to shrink
FHA's presence in the market. You and I agree, however, that
more can and should be done to correct fundamental structural
problems in FHA's reverse mortgage program (the Home Equity
Conversion Mortgage, or HECM, program), and to refine FHA's
risk profile so that both FHA and borrowers are better able
to weather the difficulties of any future downturn in the
housing market and economy. We are also committed to measures
that facilitate the return of private capital to the market.
I appreciate your strong advocacy to ensure that FHA takes
the actions needed to restore its financial health. I would
like to address each of the four critical policies you raised
and the immediate actions FHA is taking to address them:
1. Minimum Credit Score for New FHA Loans: FHA is
finalizing a formal policy directive (Mortgagee Letter) that
will require borrowers with credit scores below 620 to have a
maximum total debt-to-income (DTI) ratio no greater than 43
percent in order for their loan applications to be approved
through FHA's TOTAL Scorecard, a system used by lenders to
score the quality of an FHA loan application. If a borrower's
DTI exceeds 43 percent, lenders will be required to manually
underwrite the loan, and to document compensating factors
that qualify the borrower for FHA-insured financing, such as
a larger down payment or a higher level of reserves. Our
preliminary data indicate that this requirement would reduce
claim rates by approximately 20 percent for borrowers with
credit scores of 620 or below. I believe this policy change
will significantly strengthen the extent to which FHA is
protected from unwarranted risk and borrowers are offered
loans that are sustainable for them.
2. Moratorium on the Full-draw HECM Reverse Mortgage:
Through the HECM program, seniors have access to a number of
different product options. However, in recent years, several
structural problems have developed that have altered the
usage of FHA's HECM products, changing the risks associated
with the program. While declining home prices and greater
longevity of seniors have yielded greater projected losses,
another major contributor has been the lack of a secondary
market for these loans. There are many explanations for the
evolution of these complexities, but the end result has been
an increase in risk to both FHA and borrowers that must be
rectified immediately. As discussed in our Annual Report to
Congress, FHA is preparing a policy directive that would
result in the immediate cessation of the use of the Standard
Fixed Rate HECM product. This product currently represents a
large majority of the loans insured through the HECM program,
with the Variable Rate Standard product and the HECM Saver
products (Fixed Rate and Variable) representing the balance.
The amount that can be drawn under the Saver product is
substantially less than under the Standard program, and the
upfront fees to the borrower are all but eliminated for Saver
loans. Eliminating the use of the Fixed Rate Standard program
is an immediate stop gap measure, and FHA will also commence
rulemaking to make several other important changes, including
establishing formal guidelines for conducting financial
assessments of borrowers and the creation of set-asides for
payment of taxes and insurance.
[[Page S8527]]
3. Scale Back of FHA Market Share: In June 2012, FHA began
administratively pricing mortgage insurance premiums for
large loans (loans above $625,500) at a level 25 basis points
higher than those with lower loan limits (150 bps compared to
125 bps). FHA, as mandated by Congress, is currently the only
federal entity able to insure loans between $625,500 and
$729,000. FHA is committed to taking steps to redirect this
business to the private market where it has typically been
served. With the premium increase we announced in November,
these large loans will now be priced at the current statutory
maximum for annual mortgage insurance premiums (155 bps).
Further, FHA will implement a policy change that lowers the
maximum loan-to-value ratio on loans above $625,500 to 95%
from 96.5%, or in other words, raising the down payment from
3.5% to 5% for these loans. The combination of a higher down
payment and higher mortgage insurance premiums for these
loans will continue our efforts to drive this business to the
private market.
4. Access to FHA Loans After a Foreclosure: Borrowers are
able to access FHA-insured financing three years after they
have experienced a foreclosure only if they have
reestablished good credit and qualify for an FHA loan in
accordance with the fully documented underwriting
requirements for any FHA-insured mortgage origination. FHA is
concerned that a few lenders are inappropriately advertising
and soliciting borrowers with the false pretense that they
can somehow ``automatically'' qualify after three years.
First and foremost, FHA will step up its enforcement for FHA-
approved lenders with regard to such advertising and remind
them of their duty to fully underwrite loan applications in
accordance with FHA guidelines. In addition, the credit
score/DTI policy outlined above will be applicable to
borrowers seeking to obtain FHA-insured financing following a
foreclosure. Furthermore, FHA is committed to performing
additional data analysis to determine if the original cause
of a borrower's foreclosure was due to a one-time economic
event, such as the loss of employment that has since been
regained, and whether that results in any different or better
performance than other reasons for foreclosure. This effort
may inform future policies in this area. Finally, as
discussed in our Annual Report to Congress, FHA is also
committed to structuring a new housing counseling initiative
that would apply to a number of borrower classifications,
including borrowers with previous foreclosures.
Senator, I deeply appreciate the advocacy, focus, and
concern you bring to ensuring that the Mutual Mortgage
Insurance Fund is restored to financial health as rapidly as
possible. I share your sense of urgency about these matters,
and I commit to you that I will move on these additional
actions by January 31, 2013, and I have confirmed that the
Administration will support these new policies. You have my
word on this and I expect to be held accountable to perform.
Sincerely,
Carol J. Galante,
Acting Assistant Secretary for Housing--
Federal Housing Commissioner.
Mr. CORKER. Again, I wish to thank the Senator from Alabama for his
comments regarding FHA. I agree; a lot has to change. I just think we
are much better having a Director there to try to make those changes
happen than not.
With that, I yield the floor and see the Senator from Ohio in the
Chamber.
The ACTING PRESIDENT pro tempore. The Senator from Ohio.
Mr. BROWN of Ohio. Mr. President, I thank the Senator from Tennessee,
who is a valued member of the Banking Committee. I thank him for his
comments in support of Ms. Galante's nomination, and I appreciate some
of the criticisms Senator Shelby offered. I wish to answer a couple of
those but then move directly to Ms. Galante and concur in the support
for Ms. Galante from Senator Corker.
Two years ago, Senator Begich and I introduced an FHA reform bill
which, unfortunately, because of people on the other side, has been
blocked, for whatever reasons.
Two weeks ago, we tried to pass the FHA Emergency Fiscal Solvency
Act--a commonsense reform measure that came out of the House of
Representatives, sponsored by a Republican from Illinois, Congressman
Biggert. She is the chair of the relevant House Financial Services
Subcommittee. It passed the House on a suspension, 402 to 7--an unusual
demonstration of bipartisanship in the House of Representatives.
Passing that bill would not have prevented action next Congress. Yet
some of my colleagues again stand in the way of these taxpayer
protections.
Let me turn to Ms. Galante and the reasons I am supporting her
nomination.
As an Ohioan, I am inclined to support an Ohio Wesleyan graduate who
is married to an Akron native. Obviously, more important than that, she
has shown deep interest in the challenges facing the housing market in
northeast Ohio, a place that has been devastated by a hollowing out of
our manufacturing base and preyed upon by unscrupulous subprime
lenders--for a period of more than a decade, I might add.
She has met with the Cuyahoga County Land Bank, the Cleveland Housing
Network, city officials to hear about all the great work people are
doing in northeast Ohio to rebuild the city's housing market. Some of
the most innovative ideas in the country have come out of Cleveland and
the land bank and the housing network.
After I sat down with her and shared stories of big banks that were
allowing FHA properties in Cincinnati to fall into decay, FHA updated
its servicing rules to hold these banks accountable.
FHA has selected Cleveland, Akron, and Canton for its next round of
note sales. This program allows for the sale of distressed and
delinquent FHA mortgages to parties that will rehabilitate the loans in
order to help stabilize these neighborhoods.
Because of her many years of experience in housing and real estate
and her commitment to addressing the crucial issues facing today's
hardest hit cities--big cities and smaller cities alike--and what has
happened to these housing markets, I urge a ``yes'' vote on the Galante
nomination.
I suggest the absence of a quorum.
The ACTING PRESIDENT pro tempore. The clerk will call the roll.
The assistant legislative clerk proceeded to call the roll.
Mr. JOHNSON of South Dakota. Mr. President, I ask unanimous consent
that the order for the quorum call be rescinded.
The ACTING PRESIDENT pro tempore. Without objection, it is so
ordered.
Mr. JOHNSON of South Dakota. Mr. President, I rise in support of the
nomination of Ms. Carol J. Galante to be HUD Assistant Secretary for
Housing and Federal Housing Commissioner.
Carol Galante currently serves in the position for which she has been
nominated. Prior to her designation as the Acting FHA Commissioner, Ms.
Galante served as the Deputy Assistant Secretary for Multifamily
Housing Programs, overseeing HUD's FHA multifamily portfolio as well as
1.6 million units of assisted housing.
The FHA is playing an important countercyclical role in the housing
market, providing credit as private sources of capital have withdrawn.
Much has been done by the administration and Congress to strengthen
FHA's underwriting and fiscal position in recent years. However, as we
have seen in a recent report on the financial status of the FHA, the
legacy of loans insured in prior years still pose a threat to the fund
that must be managed. It is important that the FHA have a confirmed
management team in place to continue oversight of these legacy loans.
Ms. Galante is a highly qualified nominee, and I urge my colleagues to
confirm her without delay.
I yield the floor and suggest the absence of a quorum.
The ACTING PRESIDENT pro tempore. The clerk will call the roll.
The bill clerk proceeded to call the roll.
Mr. McCONNELL. Mr. President, I ask unanimous consent that the order
for the quorum call be rescinded.
The PRESIDING OFFICER (Mr. Franken.) Without objection, it is so
ordered.