[Congressional Record (Bound Edition), Volume 154 (2008), Part 4]
[Senate]
[Pages 5184-5188]
[From the U.S. Government Publishing Office, www.gpo.gov]




NEW DIRECTION FOR ENERGY INDEPENDENCE, NATIONAL SECURITY, AND CONSUMER 
PROTECTION ACT AND THE RENEWABLE ENERGY AND ENERGY CONSERVATION TAX ACT 
                                OF 2007

  The PRESIDING OFFICER. Under the previous order, the Senate will 
continue with the consideration of H.R. 3221.
  Mr. DODD. Mr. President, I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. DODD. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. DODD. Mr. President, there are at least one or two other Members 
who may come to the floor to talk about this bill or maybe even offer 
some ideas they intend to propose next week when we reconvene. I 
thought it might be worthwhile at the end of this week--which has been 
a busy week, obviously, and one where a lot of attention for the first 
time in a long time has been focused on the most critical economic 
issue we face, and that is the foreclosure crisis--to restate where we 
are.
  As many of my colleagues know, I began this process almost a year ago 
when we convened the stakeholders across the country on a bipartisan 
basis, I might add, in the Senate Banking Committee to talk about the 
foreclosure crisis--that was March of last year--resulting in a set of 
principles we adopted jointly that would make it possible for workouts 
of these mortgages that would make it possible for more Americans 
facing foreclosures to stay in their homes. That was the goal as we 
began last spring when this emerged as a growing problem.
  I felt then, and it has been confirmed over the last number of 
months, that this was not a minor issue, that it was not going to go 
away or likely to be contained very quickly. Unfortunately, that has 
proven to be just the case.
  Today, we are looking at economic statistics that point to a 
difficult time. We are in a recession. I know it has not been declared 
formally yet, maybe Washington hasn't called it that yet, but if you 
are out there trying to feed your family, put fuel in your automobile, 
pay your mortgage, pay your child's college tuition or anything else, 
you are watching inflation at the highest rates it has been in years, 
and we are watching unemployment numbers continue to rise. The fiscal 
picture of our country is the worst it has been in years, with the 
national debt now reaching some $9 trillion, a staggering sum of money 
accumulated over the last 5 or 6 years. The value of the dollar is the 
lowest it has been since we allowed our currency to float back in the 
early 1970s.
  Every major economic indicator points to what difficulty our country 
is in, and this crisis has been compounded and exacerbated by a 
foreclosure crisis. That is the center of this issue, the foreclosure 
crisis. So everything we should be doing should be designed to

[[Page 5185]]

try to offer relief in that sector. If we do that, then I believe we 
can take a major step forward in getting us back on track again and, 
hopefully, this recession will not last long and people's confidence 
and optimism can begin to rise.
  This is the first time we have dealt with this issue in any 
comprehensive way at all in the last year. There have been a number of 
other bills that have been brought to the floor that have made some 
contribution to this issue. But this is the first time we have actually 
had a day or two to debate the housing crisis and to offer some ideas 
on resolution of that issue.
  I want to add, as quickly as I can, that anyone who thinks this bill 
is the end-all is making a huge mistake. This bill is a step in the 
right direction, it is a positive one and a good one, but there are key 
missing ingredients. Why is that the case? That is the case because, 
candidly, we weren't able to get any debate going at all unless we 
could develop some consensus around several provisions on which there 
would be little or no debate, some core issues, and then open the 
process for some additional ideas, as we have seen over the last few 
days, with various amendments that have been offered and considered 
already. But it is a step in the right direction. It does not include 
the kind of fundamental relief for those in foreclosure or about to go 
into foreclosure and offering them some escape from losing their homes.
  So while I welcome the steps we are taking, I would be the first to 
admit and tell my colleagues that we have yet to really address the 
underlying problem; that is, how do we keep people in their homes? In 
fact, we will have a hearing next week, Mr. President, on the very idea 
that has now been circulating over several months and that I proposed 
back several months ago--that has also been embraced, I might point 
out, by the chairman of the Financial Services Committee of the other 
body. I am pleased to say that there are a number of Members here, both 
Republicans and Democrats, who, while they have not signed on to a 
bill, have been extremely encouraging in terms of their support for 
this idea. So I hope in the coming days to be able to finalize a 
proposal and bring it to the floor that would, for the first time, 
offer some very meaningful direct relief to the people who are facing 
foreclosure--some 8,000 a day.
  We talk in numbers here of billions of dollars and millions of 
people, trillions of dollars. The language gets beyond the grasp of 
most people to understand. But I think everyone can understand when I 
tell you that almost 8,000 people a day are going into foreclosure. 
Over the last 2 or 3 days we have been debating this bill on the floor, 
some 24,000 of our fellow citizens are finding themselves in danger of 
losing the most important possession they have outside of their 
families, and that is their home. And every day we wait, every day we 
delay, every day we procrastinate, every day we talk about something 
other than the core issue affecting our economy, more and more 
Americans run the risk of being in that statistic of losing their 
homes. And it isn't just them, because for every foreclosure that 
occurs in a square block, the value of every other home in that 
neighborhood declines as well. So while people are saying: Well, I am 
not in foreclosure, I am not likely to be there, but my neighbors are, 
you are affected by it. We know that values decline by as much as 1 
percent of median if one of your neighbors watches their property go 
into foreclosure, if it ends up being boarded up or in deteriorating 
condition. Crime rates go up. So there is a ripple effect to all of 
this, and hence the importance of addressing the underlying issue of 
how do we keep people in their homes.
  A lot of what we are talking about in this bill is how to deal with 
the properties once they are foreclosed. That is not an insignificant 
problem, and I welcome the opportunity to do something about it. But it 
seems to me that if we really wanted to address the issue, instead of 
how much money we can spend to rehabilitate foreclosed property or how 
much money we can get to mayors or county supervisors to clean up 
neighborhoods and to put them in better shape for possible resale, or 
to come up with a tax provision that will make that foreclosed property 
attractive to some future buyer, why not spend as much time seeing to 
it that we keep people, where we can, in their homes? That is what we 
are going to be offering in the coming days.
  But there are some very good ideas in this proposal, so as we go into 
the weekend now, before we come back on Monday and Tuesday, I thought 
it might be worthwhile just to briefly encapsulate what has been 
accomplished and what is in this bill.
  First of all, we provide $100 million for counseling services to help 
people stay in their homes. That is in addition to the $180 million 
already appropriated last year. Senator Bond and I offered that 
language, and it was adopted, and it has been a real asset to these 
organizations out there that assist people every day.
  I had the privilege of meeting with some families in Connecticut a 
week or so ago who were facing foreclosure and would have been in 
foreclosure but for the intervention of these nonprofit organizations 
that were able to establish a workout with the lender and the borrower 
and have been able to keep people in their homes. So this is $280 
million for this fiscal year. If you compare that to the $42 million 
that existed previously, it is a substantial increase.
  Would I like more here? Absolutely. My colleague from the State of 
Washington, Senator Murray, and Senator Schumer wanted $200 million. I 
am not going to ever tell them I disagree with that, but in trying to 
put together a package here, the only amount of money the majority 
leader and I were able to get in that negotiation was to cut the 
difference and get $100 million for counseling. I am hopeful we can add 
some more to that in time, but at this juncture we have $100 million 
for it.
  We have provided $4 billion to go to community development block 
grants specifically targeted to assist local governments to take a 
foreclosed property and put it in condition so it can be resold or used 
as rental housing. That idea is to try to make sure we don't end up 
with a lot more supply than we already have.
  One of the reasons the market is not necessarily addressing this 
issue as comprehensively as we might like is because the supply of 
housing vastly exceeds demand. When you end up with people in 
foreclosure, you are adding to that supply. One of the reasons we ought 
to keep people in their homes is you then reduce that supply, and the 
normal economic market forces then would begin to assist us. That is 
where supply and demand get closer together and the market can help 
resolve some of this problem. By having foreclosed properties that grow 
worse, become abandoned, fall into disrepair, the value of other homes 
begins to decline in the neighborhood, and it makes it far more 
difficult to address this problem in the near or long term. So the $4 
billion in community development block grants is designed to go to 
those communities and specifically give them help to see to it that 
these properties can get back on their feet.
  The mortgage revenue bonds we are providing here as well, some $1.5 
billion for mortgage revenue bonds, will help people refinance out of 
the lousy mortgages they got into. It is not as much as I would like, 
but it will assist people to get a better deal, a better mortgage than 
the one they have. That does make a difference for some of these people 
who are trying to come to a different economic circumstance than the 
one they are in. So it is not insignificant. I would have liked to have 
seen us do a bit more, but it will make a difference. So there is $1.6 
billion in that area.
  Veterans. I want to thank Senators Kerry, Akaka, Sanders, and I think 
Senator Coleman as well, if I am not mistaken, who were all involved in 
trying to do what we could to assist our men and women serving in 
uniform in Iraq and Afghanistan and who are already under tremendous 
pressure, to make sure their properties are not foreclosed on 
underneath them while they are off in a desperate condition serving our 
country. Whether you agree or disagree with our policies, don't ever 
blame the soldier, the airman, the marine, the sailor out doing

[[Page 5186]]

their job, and least of all they shouldn't be losing their homes in the 
process. So we provided for that in this legislation as well, and I 
thank my colleagues for those ideas.
  We provided as well some assistance here for builders. I had some 
questions about this, I will be quite candid with my colleagues, and 
had I been writing this on my own, I am not sure I would have added 
those provisions. But there were those here who felt strongly about 
that, both Republicans and Democrats, and wanted to do something in the 
Tax Code to assist in these losses, to extend them over a longer period 
of time. It is in the bill. Again, I had some reservations about it, 
but, as my colleagues know, you don't write these things on your own, 
and if you are trying to put together a compromise package, the word 
``compromise'' implies that you are going to accept some things you may 
not like and you are going to have some things tailored back that you 
want support for.
  On Federal Housing Administration modernization, here we have raised 
the loan limits from $417,000 to $550,000. We also require that the 
downpayments will be as much as 3\1/2\ percent. That is a lot more than 
I would like, candidly. I wanted 1\1/2\ percent. But in order to get 
that additional $230,000 increase over the loan limits, where some 19 
States, I might add, would have been disadvantaged--higher cost States 
or at least part of their States in higher cost--we had to agree on a 
compromise here and raising that number to 3\1/2\ percent. But that 
$550,000 under FHA will make a huge difference for many people who are 
looking again to refinance or to get mortgages they can afford. So it 
is a very valuable addition to this bill, and I welcome the opportunity 
to include that as well.
  Those are some of the major provisions of what we have packaged. 
There will be additional amendments offered on Tuesday that will add to 
this, some of which or all of which may be adopted either by voice vote 
or recorded votes, but it is a step again in the right direction. It is 
action. It is movement on this issue.
  Again, as I said, the bill doesn't in any way go far enough, in my 
view, to help the distressed borrowers, those who are living under the 
monthly threat of foreclosure, in fact the daily threat of foreclosure 
on their homes. So it is hardly a final action, but it is a first step 
and a major step in the right direction.
  There was an idea that I had hoped to include in this bill and that I 
couldn't get agreement to bring as part of the bill. The danger of 
bringing it up as an amendment, Mr. President, is that I am concerned, 
because it is complicated, it might not carry, and therefore, with 
negative votes, it would be harder to bring it back. But as many will 
tell you here, the effort to try to restructure these mortgages could 
make a huge difference.
  One of the problems we are having, of course, is that capital has 
seized up. It is not moving. How do you begin to get capital to flow in 
these markets? One certain way is to get some clear ideas of where the 
bottom, where the floor is in the residential mortgage market, and that 
is unclear as I speak. As long as it is unclear where that bottom is, 
then you are going to find people very reluctant to move capital into 
this area, or others, for that matter. This problem has spread far 
beyond the housing issue. It is now into student loans, car loans, and 
every other aspect of our economy is being affected by this.
  So the idea--and it is not a new one; actually, it has been used in 
the past--is to try to see if we can come up with a scheme that would 
allow us to reduce or write down the value of these mortgages to some 
degree, thereby the lender would be getting less than they anticipated 
when they made the original mortgage, but they would end up getting 
something rather than a foreclosed property and nothing coming back. 
Secondly, the borrower would have to pay the insurance to FHA, which 
would guarantee this mortgage. They would also have to stay in the 
home. These residences would have to be owner occupied. It is a 
voluntary program both for the lender and the borrower. To the extent 
that value in the property increases, then money would come back to the 
Federal Government as a result of financing, through insurance, this 
instrument.
  That is a rough idea of what it would do. The real value of it, aside 
from obviously helping people stay in their homes, is establishing that 
floor and that bottom. Anyone who is paying any attention to this issue 
at all will tell you that unless we address that issue--address that 
issue--we will be back here month after month after month in the coming 
years dealing with the effects of the problem, and that is money going 
to our cities to help them make foreclosed properties look better, and 
we will be doing things we can to help out people to somehow get 
through all of this. But if you really want to address the issue, then 
you have to confront the problem, and that is that capital is not 
moving.
  The one thing we can do, of course, is to provide this kind of floor. 
You need to have enough transactions to determine that, but I believe 
that if we act quickly enough around here, we can make a difference in 
that area. And I will hold a hearing on this in the Banking Committee 
next week. We will have one additional hearing, at the request of 
Senator Shelby and others, to examine this issue and fine-tune it. I am 
pleased a number of people here and outside of this body have indicated 
very strong support for this idea, cutting across the normal 
ideological lines that too often divide us, as something we ought to 
do.
  I invite my colleagues to take a good look at this, or their staffs, 
over the weekend. I will submit, at the end of these remarks, a copy of 
the bill and its proposals, and I would strongly invite people to take 
a look at it, and any thoughts and ideas they have to strengthen this 
or improve it, I welcome. No one is claiming exclusive authorship of 
this idea. As I mentioned, it was tried during the Great Depression. In 
those days, the Federal Government actually purchased these very 
distressed mortgages at a very discounted rate and then arranged for 
that owner-occupied resident to stay in the home at a new rate. The 
Government actually made some $14 million on that program back in the 
Great Depression. We are not suggesting anything quite like that, 
although there are some similarities to it as a way of keeping people 
in their homes.
  Anyway, I invite people to look at that idea because I think it does 
go right to the heart of what we are talking about. There are other 
ideas as well to try to strengthen this situation, but unless we do 
something like what I have suggested here, actually dealing with the 
8,000 people a day who are falling into foreclosure, then this problem 
is only going to grow in its magnitude and the ability to provide some 
relief for people is going to grow far more expensive than it already 
is. That is the reason I am urging my colleagues to take a look at this 
idea to see if we can't, in the coming few days, complete a markup in 
the committee and then bring a bill to the floor that would really 
provide some meaningful and direct assistance to those who are facing 
this problem.
  Look, I am not talking about speculators, Mr. President. That is a 
different crowd altogether. I feel bad that they have lost money, but 
we bear no moral obligation to help out a speculator. And I am worried 
about those who should never have gotten into a mortgage in the first 
place, but there is probably not a lot I can do about them except to 
help them in some ways.
  We are talking about that large constituency in the middle, who were 
lured into very bad deals, were lured into arrangements they never 
could afford at the fully indexed rate. You could say they bear some 
responsibilities for having gone into those deals, and I do not 
disagree with that, but if you only were going to look at the 
foreclosed property you might draw that conclusion--we bear no 
responsibility to deal with the individual caught in those 
circumstances. But let me make a case to you if you are harboring those 
thoughts, why you might want to think differently about this. If you 
live in that neighborhood, if you

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live next-door or you live down the block or if your child does, in a 
new home, one they just bought, the value of every other property 
declines with one foreclosure in a neighborhood. That doesn't help 
anybody. We are watching housing values decline two consecutive years 
in a row. This is the first time that has happened since the Great 
Depression; sales are way off--all the related economic problems 
associated with a massive downturn in the housing area.
  We may have as many as 50 million homes adversely affected by 
foreclosure. The number of foreclosures could be somewhere between 2.5 
and 3 million homes in the country, but the number of homes affected by 
it is vastly in excess of the number of actual foreclosures. Those 
numbers on foreclosures may be low. It may be higher than that. We are 
hoping it will not be. But even if not, the ripple effect is going to 
be felt by everyone else in the area. If you are harboring the notion I 
don't care about my neighbor, I am sorry they got themselves into that 
mess, I feel badly for them, but I don't think we have any obligation 
to do anything about them at all, I remind you it will affect you--it 
affects all of us; hence, the necessity to address this issue and do 
everything we can to keep people in that home if we can.
  We are all going to benefit from that. Our economy clearly would also 
benefit in a very specific way; people who live within that 
neighborhood will be benefited by our efforts to try to stabilize this 
situation and have better financial arrangements for those who 
otherwise are going to lose their homes.
  That is where we are as we complete our business at the conclusion of 
this week. This bill has been a good week, I would say. This bill is 
not one that has everything we would like to have in it, but the good 
news is this: The Senate, for the first time in a year, is 
comprehensively trying to address this housing crisis. While you may 
not agree with everything we have done--you may be disappointed, as I 
am, that we do not have some provisions in here I would like to see 
included--the fact is we are debating, discussing and coming up with 
ideas and adopting them, to provide some relief for people in this 
area, as it should be.
  I am grateful to Senator Shelby, my colleague from Alabama, the 
former chairman of the Banking Committee. I am very grateful to the 
majority leader, Senator Reid. When I talked to him last week before we 
came back, we both agreed this was an issue we had to pursue. He agreed 
and went out and sought out Senator McConnell and created the kind of 
arrangement that allowed for Senator Shelby and I to spend over 24 
hours to package a proposal that could serve as the core coming 
forward. So we owe a deep debt of gratitude to the majority leader for 
insisting this be the debate this week, that we move forward next week 
and try to conclude our business, get together with the other body and 
resolve these matters and then come back with other ideas on how we can 
provide some real relief in this area.
  I conclude by thanking him and his staff as well as our own staffs on 
the Banking Committee who worked through the night to try to come up 
with some compromises in these areas. It is always difficult to do it 
when you have 50 Members in a body with very strong ideas on where 
things ought to be. These people don't often get the recognition they 
deserve for spending the long hours and putting together these kinds of 
packages. I am grateful to the Senate Banking staff, Democrats and 
Republicans, for their efforts. My hope is next week we can conclude 
this and then come back again with some additional ideas that can truly 
make a difference.
  I thank everyone for their involvement. I know there are several 
other people who want to come over and be heard on this subject matter, 
but in their absence, I suggest the absence of a quorum.
  The PRESIDING OFFICER (Mr. Webb). The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. DODD. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.


                Amendment No. 4406, as Further Modified

  Mr. DODD. Mr. President, I ask unanimous consent that notwithstanding 
adoption of amendment No. 4406, as modified, the amendment be further 
modified with the changes at the desk.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment, as further modified, is as follows:

       At the end of title VI, insert the following:

     SEC. ___. ELECTION TO ACCELERATE AMT AND R AND D CREDITS IN 
                   LIEU OF BONUS DEPRECIATION.

       (a) In General.--Section 168(k), as amended by this Act, is 
     amended by adding at the end the following new paragraph:
       ``(5) Election to accelerate amt and r and d credits in 
     lieu of bonus depreciation.--
       ``(A) In general.--If a corporation which is an eligible 
     taxpayer (within the meaning of paragraph (4)) for purposes 
     of this subsection elects to have this paragraph apply--
       ``(i) no additional depreciation shall be allowed under 
     paragraph (1) for any qualified property placed in service 
     during any taxable year to which paragraph (1) would 
     otherwise apply, and
       ``(ii) the limitations described in subparagraph (B) for 
     such taxable year shall be increased by an aggregate amount 
     not in excess of the bonus depreciation amount for such 
     taxable year.

       ``(B) Limitations to be increased.--The limitations 
     described in this subparagraph are--
       ``(i) the limitation under section 38(c), and``(ii) 
     Eligible Qualified Property.--For purposes of clause (i), the 
     term `eligible qualified property' means qualified property 
     under paragraph (2), except that in applying paragraph (2) 
     for purposes of this clause--
       ``(iii) the limitation under section 53(c).
       ``(C) Bonus depreciation amount.--For purposes of this 
     paragraph--
       ``(i) In general.--The bonus depreciation amount for any 
     applicable taxable year is an amount equal to the product of 
     20 percent and the excess (if any) of--

       ``(I) the aggregate amount of depreciation which would be 
     determined under this section for property placed in service 
     during the taxable year if no election under this paragraph 
     were made, over
       ``(II) the aggregate amount of depreciation allowable under 
     this section for property placed in service during the 
     taxable year.

     In the case of property which is a passenger aircraft, the 
     amount determined under subclause (I) shall be calculated 
     without regard to the written binding contract limitation 
     under paragraph (2)(A)(iii)(I).
       ``(ii) Eligible Qualified Property.--For purposes of clause 
     (i), the term `eligible qualified property' means qualified 
     property under paragraph (2), except that in applying 
     paragraph (2) for purposes of this clause--

       ``(I) `March 31, 2008' shall be substituted for `December 
     31, 2007' each place it appears in subparagraph (A) and 
     clauses (i) and (ii) of subparagraph (E) thereof,
       ``(II) only adjusted basis attributable to manufacture, 
     construction, or production after March 31, 2008, and before 
     January 1, 2009, shall be taken into account under 
     subparagraph (B)(ii) thereof, and
       ``(III) in the case of property which is a passenger 
     aircraft, the written binding contract limitation under 
     subparagraph (A)(iii)(I) thereof shall not apply.

       ``(iii) Maximum amount.--The bonus depreciation amount for 
     any applicable taxable year shall not exceed the applicable 
     limitation under clause (iii), reduced (but not below zero) 
     by the bonus depreciation amount for any preceding taxable 
     year.
       ``(iv) Applicable limitation.--For purposes of clause (ii), 
     the term `applicable limitation' means, with respect to any 
     eligible taxpayer, the lesser of--

       ``(I) $40,000,000, or
       ``(II) 10 percent of the sum of the amounts determined with 
     respect to the eligible taxpayer under clauses (ii) and (iii) 
     of subparagraph (D).

       ``(v) Aggregation rule.--All corporations which are treated 
     as a single employer under section 52(a) shall be treated as 
     1 taxpayer for purposes of applying the limitation under this 
     subparagraph and determining the applicable limitation under 
     clause (iii).
       ``(D) Allocation of bonus depreciation amounts.--
       ``(i) In general.--Subject to clauses (ii) and (iii), the 
     taxpayer shall, at such time and in such manner as the 
     Secretary may prescribe, specify the portion (if any) of the 
     bonus depreciation amount which is to be allocated to each of 
     the limitations described in subparagraph (B).
       ``(ii) Business credit limitation.--The portion of the 
     bonus depreciation amount allocated to the limitation 
     described in subparagraph (B)(i) shall not exceed an amount 
     equal to the portion of the credit allowable under section 38 
     for the taxable year which is allocable to business credit 
     carryforwards to such taxable year which are--

       ``(I) from taxable years beginning before January 1, 2006, 
     and

[[Page 5188]]

       ``(II) properly allocable (determined under the rules of 
     section 38(d)) to the research credit determined under 
     section 41(a).

       ``(iii) Alternative minimum tax credit limitation.--The 
     portion of the bonus depreciation amount allocated to the 
     limitation described in subparagraph (B)(ii) shall not exceed 
     an amount equal to the portion of the minimum tax credit 
     allowable under section 53 for the taxable year which is 
     allocable to the adjusted minimum tax imposed for taxable 
     years beginning before January 1, 2006.
       ``(E) Credit refundable.--Any aggregate increases in the 
     credits allowed under section 38 or 53 by reason of this 
     paragraph shall, for purposes of this title, be treated as a 
     credit allowed to the taxpayer under subpart C of part IV of 
     subchapter A.
       ``(F) Other rules.--
       ``(i) Election.--Any election under this paragraph 
     (including any allocation under subparagraph (D)) may be 
     revoked only with the consent of the Secretary.
       ``(ii) Deduction allowed in computing minimum tax.--
     Notwithstanding this paragraph, paragraph (2)(G) shall apply 
     with respect to the deduction computed under this section 
     (after application of this paragraph) with respect to 
     property placed in service during any applicable taxable 
     year.''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to property placed in service after December 31, 
     2007, in taxable years ending after such date.

                          ____________________