[Congressional Record (Bound Edition), Volume 155 (2009), Part 8]
[House]
[Pages 11129-11135]
[From the U.S. Government Publishing Office, www.gpo.gov]




                  FISCAL ISSUES AFFECTING THE COUNTRY

  The SPEAKER pro tempore (Ms. Markey of Colorado). Under the Speaker's 
announced policy of January 6, 2009, the gentleman from Massachusetts 
(Mr. Capuano) is recognized for 60 minutes as the designee of the 
majority leader.
  Mr. CAPUANO. Madam Speaker, I am here tonight to talk about some of 
the fiscal issues that have affected this country and how they were 
caused and maybe a little bit of who caused them and who didn't cause 
them.
  Over the last several months, obviously there has been a lot of 
debate about this and there have been a lot of people who want to point 
a lot of fingers at other people. And that is natural. We all tend to 
do some of that in our lives, and it is particularly natural here in 
Washington. People love to point fingers at somebody else when there 
are bad things going on, and people love to point fingers at themselves 
when there is something good that goes on.
  In this particular case, with the financial crisis that we have, 
instead of stepping up and understanding that, I believe every single 
American, including me, has some degree of blame in the current fiscal 
situation. Everybody tried to get a piece of the American dream. 
Everybody tried to punch up whatever retirement plans they had. 
Everybody tried to get better rates on their loans. Everybody tried to 
get better rates on their credit cards. Everybody tried to get more 
mortgages than they could afford. Everybody tried to do it. And, of 
course, some people in business were there to try to provide those 
things.
  So I think it is a little ludicrous to try to blame anyone in 
particular, or actually any group of people. I think it is all of us 
that have some degree of blame.
  As I heard some of my colleagues just a few minutes ago try to blame 
Fannie and Freddie or try to blame individual Members of the House or 
individual Members of the Senate, I think that is ridiculous, and I 
actually have more faith in the average American than to think they 
would think any individual or any one group could do it.
  In this particular case, let's go back just a little bit. What were 
Fannie and Freddie created for? They were created to help the middle 
class be able to purchase a home. That is why they were created. 
Because before their creation, home ownership was limited to only about 
20 to 30 percent of Americans. About 60 to 70 percent of Americans were 
never able to afford a home because banks simply wouldn't make loans 
unless they were absolutely guaranteed of always getting their money 
back. They wouldn't take any risk whatsoever.
  So Fannie and Freddie were created in order to stabilize home 
ownership that was on the border. They were also created, most 
importantly, to expand the availability of mortgages to working people. 
And it happened slowly, over time. This country went from a place where 
only 30 percent of Americans own homes, to now in today's world 
approximately 70 percent of Americans own their own homes. That is in 
contrast to most of Western Europe, where it is about 90 percent of 
people own their own homes.
  I personally think, having been raised in a middle-class, lower-
middle-class family, that home ownership is still the best way to 
guarantee entry and maintenance of a middle-class lifestyle, because it 
is the largest purchase any of us will ever make, most of us will ever 
make. It is the most important purchase.
  In the normal course of events, over time, you build up equity in a 
home. And most of us have to remortgage it to send our kids to college. 
That is how most of us afforded to be able to send our kids to college.
  All that being said, Fannie and Freddie and their concept of a 
government-sponsored enterprise have created over time an immense 
number of homeowners, an immense number of people who would not 
otherwise have had an opportunity to get a mortgage.

                              {time}  2000

  I have no doubt. I totally agree that over the last 10 or so years, 
like everybody else, they decided to stretch some of the definitions to 
do some things that maybe were questionable, not necessarily for any 
nefarious reasons, but for the same reason banks were doing it, for the 
same reason hedge funds were created, for the same reason private 
equity firms were created, to get a little bit better return.
  Now, there were many of us at the time, now I'm talking back in 2005 
and earlier, who said, you know, maybe they've gone too far; maybe 
they've expanded it just a little bit too much; maybe they have to be 
reined back in.
  And back at that time, our friends, the Republicans on the other side 
of the aisle, were in charge of the House, they were in charge of the 
Senate, and they were in charge of the White House. And we worked with 
them. We worked with Chairman Mike Oxley of the Financial Services 
Committee to try to come up with a bill that would address some of 
these very issues, and we did. We got a bill out of committee and on to 
the floor of this House in a bipartisan fashion that would have

[[Page 11130]]

reined in some of the concerns that these people that have just talked 
have about Fannie and Freddie, and not just Fannie and Freddie. I don't 
want to pretend in any way that they were the only ones doing this, but 
they were also the ones that we were responsible for. It would have 
reined them in. And it was done in a responsible way, in a bipartisan 
way, with Chairman Oxley and at that time Ranking Member Barney Frank 
and the White House, the Bush White House, not the Obama White House, 
not the Clinton White House, but with the Bush White House.
  When the bill got out here some of the more extreme Members wanted to 
shut down the whole thing, having no clue how most of their own 
constituents were able to afford a home, and they raised all their 
concerns, all the same ones you've heard tonight, that government 
should have nothing to do with mortgage rates. Well, that's ridiculous. 
That is ridiculous. And they just decided to kill it. This is back in 
2003, 2004 and 2005.
  And if you don't believe me, we have quotes here from Chairman Oxley 
himself, who was quoted as saying--now, this is after the fact. This is 
dated September 2008, talking about those times. And Chairman Oxley 
himself, this is a quote from the Financial Times, not necessarily the 
bastion of liberal thinking. He fumes about the criticism of his House 
colleagues. This is a quote: ``All the hand-wringing and bed wetting is 
going on without remembering how the House stepped up on this,'' he 
says.
  What did we get from the White House? We got a one-finger salute. 
When we tried to rein in Fannie and Freddie, the right-wing members of 
the Republican Party decided to say ``no.'' They decided to let it 
ride.
  Now, I understand what they were doing for political purposes. I 
don't understand, still don't to this day understand what they were 
trying do for financial purposes or government purposes. But ideologues 
around this place never understand that sometimes doing what's right 
for people is better than winning an ideological argument.
  In this case, if we had simply done that one thing, according to, 
again, this is the Republican chairman of the Financial Services 
Committee at the time, when the House was run by Republicans, the 
Senate was run by them and they had the White House. This is a direct 
quote. ``We missed a golden opportunity that would have avoided a lot 
of the problems we're facing now.'' That's his quote, not mine. I 
happen to agree with him, obviously.
  We didn't take the opportunity. And what happened? A few years after 
that things got a little worse. Democrats finally took the House back.
  What was one of the very first things we did? We passed a bill to 
reform Fannie and Freddie. We passed a bill to reduce and restrict 
subprime loans as quickly as we could. You can't put the genie back in 
the bottle. This was 2007, after most of the problems had been caused.
  Now, that doesn't mean, I won't pretend that myself and others don't 
have some degree of blame. I am happy to accept my degree.
  What did I do? What did people who agreed with me do?
  I was happy to push to allow more people to qualify for mortgages. I 
thought at that time, and I still believe, that that is a good goal. I 
will admit, knowing what we know now, maybe we pushed a little too hard 
for some people. I agree with that. I understand that. That doesn't 
mean when times get better, people like me won't push again, because I 
still believe that the best way into the middle class and the best way 
to stay in the middle class is home ownership. And I don't know anyone 
who disagrees with that, except people that are already in the higher 
income brackets, who they have theirs, and they're more than happy to 
pull up the ladder for the next people trying to make it to the middle 
class.
  People want to rewrite history. I understand that. It's not new. It's 
an old political game. But facts are facts. When the government 
agencies had overstepped some of their boundaries, we were there to try 
to help them, help get them back within those boundaries. We worked 
with Republicans. We got a good bipartisan bill out of committee, and 
then that bill fell into the hands of the Newt Gingriches and others of 
the world who just let their ideology control everything they do and 
everything they say.
  And we didn't have the votes. As soon as we got the votes, we 
addressed the issues, and we are still addressing them now. Yes, we're 
trying to fix the mess that we inherited and we will continue to try to 
do so. But we're also trying to make sure, while we're doing that, that 
these things can't happen again. And we have done that already, to some 
degree. We have a few more things that we have to do.
  As a matter of fact, today we spent a fair amount of time in 
Financial Services passing a bill that hopefully will be on the floor 
next week, or the week after, that will continue that process, to make 
sure that future mortgages, Number 1, are given to people who deserve 
it, Number 2, can be paid back, and yet, that balance to allow people 
to continue to access mortgages, to continue to build themselves up in 
the middle class, and to continue to be able to stay there.
  With that, Mr. Speaker, I'd like to yield as much time as she might 
desire to the gentlewoman from Illinois (Ms. Bean).
  Ms. BEAN. Thank you, Mr. Speaker, and thank to you my colleague, 
Congressman Capuano for leading this Special Order tonight.
  I wanted to just kind of go back and share with those who are 
listening tonight that when I came to Congress, I was elected in 2004, 
I came in 2005. I asked to serve on the Financial Services Committee. I 
had no idea at that time that it would be the busiest committee in 2009 
as we've worked to address the economic downturn, the likes of which we 
certainly haven't seen in my lifetime.
  But to reflect back on that history, what I was so pleased to 
discover, because we talk a lot about partisanship in the media and 
there's a feeling that there's never any working together in 
Washington, is I came to the committee in 2005 under the chairmanship 
of Republican Mike Oxley and Ranking Member Barney Frank, and they 
demonstrated what work together really means. It was a committee that 
put partisanship aside. Both leaders of both parties recognized hard 
work and good ideas; it didn't matter which side of the aisle it came 
from. They worked hard to find common ground. And I was very happy to 
be there and learned a lot from Chairman Oxley and respect him, as I've 
also come to see that Chairman Frank, as he took the gavel in 2007, has 
continued in that tradition. It's exciting to see what's possible in 
committees when ideas prevail over ideology.
  As I mentioned, it's been a busy committee, and we haven't slowed 
down. And we have a chairman that's very deliberative and consensus-
driven. Unfortunately, when Chairman Frank took the gavel in 2007, he 
was faced with some serious challenges. The subprime mortgage crisis, 
the issue of bringing proper oversight to Fannie Mae and Freddie Mac, 
and he really stepped up to those challenges. In fact, prior to that, 
we'd already been working. In fact, prior to the recent problems with 
the mortgage crisis, in 2007, we immediately passed legislation to 
address the subprime crisis and, in fact, Chairman Frank made sure that 
we passed robust oversight for Fannie Mae and Freddie Mac. That did 
pass and become law.
  Unfortunately, the mortgage reform went to the Senate, where it did 
not move and get to the President for signature and did not become law. 
And we are now, just this week in committee, and, in fact, today, we 
were marking up another mortgage reform bill that we'll be bringing 
forward, and we're more hopeful that the Senate and the President will 
act on that and it will become law so that we can eliminate the lending 
practices of the past that introduce too much risk to the system and 
set up people to fail. It's not home ownership if you're only there for 
a little while and ultimately can't make your payments.
  We have to move beyond the lack of due diligence and proper 
underwriting standards that allowed no doc, low doc loans, drive-by 
appraisals, triple A

[[Page 11131]]

rated securities that really weren't triple A that contributed to an 
economic downturn of not just systemic proportions domestically, but 
international ramifications. And we're continuing to work hard on those 
issues.
  We've worked to address foreclosure avoidance. We've worked to 
address the credit crisis. And all of this has been led by a chairman 
who continues to respect good ideas, regardless of which party they 
come from.
  I find it interesting that many have chosen to demonize particular 
individuals in the Congress, or suggest that one Member, particularly 
when he served in the minority, somehow could bring the downfall of 
Fannie or Freddie or our system in general, when, in fact, well, for 
over a decade, many on both sides of the aisle talked about the need 
for proper oversight to these large institutions, Fannie and Freddie. 
And yet, it wasn't until Chairman Frank had the gavel that we actually 
moved from rhetoric to resolution and passed that resolution in the 
House so we could bring that oversight. Unfortunately, by the time it 
did pass, it was too late to preclude government takeover of these 
institutions.
  Let me move on to a couple of other areas that we've been working on 
in committee and, again, where there's been effort to work together. 
Let's talk about the TARP funding. One of the things that I was 
impressed with was that when past President Bush came and Secretary 
Paulson at the time came to Congress requesting funds to support 
greater stabilization of our financial institutions, Chairman Frank 
didn't hesitate to bring some sincere bipartisan effort to the 
equation. He didn't accept the request as it was, which was, 
essentially, a blank check. He demanded greater accountability and more 
specific definition of the purpose of those funds, and has continued to 
fight to improve that ever since.
  But what he also didn't do is he didn't lay blame. He didn't step 
back and say, that's another party's problem. He brought constructive 
solutions forward. And that's what we all need to do in this body if 
we're to address the challenges we continue to face.
  We've had countless hearings, not only in the past Congress, but in 
this Congress, to address issues about agency abilities and lack of 
abilities; if you look, for instance, at the Madoff scandal and the 
SEC's inability to have addressed that long before they finally did and 
when it was too late.
  We've had hearings about the AIG fallout and does that bring about 
the need for a greater Federal role in insurance regulation.
  We've had hearings about systemic risk and how we can bring a greater 
authority to have an umbrella oversight beyond the functional regulator 
so we can determine where there might be risks in the system that, in a 
future downturn, could do what happened recently, affecting all of our 
businesses, our families' savings for retirement and for college, 
reducing the values of our homes. And we need to avoid that type of 
systemic fallout when we have future downturns, which we're always 
likely to have in normal cycles.
  We've talked about providing resolution authority so that, as the 
FDIC has been able to wind down failing banks in a way that has not 
been disruptive to businesses and families who are depositors of those 
banks, but to reorganize those institutions in a way that doesn't bring 
further panic to the system, we don't have, and our Federal Government 
doesn't have, clear authority relative to someone like an AIG or other 
institutions that don't fall under FDIC's ability to do that.
  So as we continue through these hearings and continue our hard work, 
I think it's important that we focus on solutions and not playing the 
blame game. This is my fifth year in Congress, and I've never come to 
this floor to attack an individual or a party, and I don't ever intend 
to do that. But I thought it was important to come, at least call it as 
I see it and lay the record more clearly where there have been those 
who have cast blame clearly in the wrong direction.

                              {time}  2015

  Many economists are telling us this is the worst crisis we have seen 
since the Great Depression. We have been forced to make hard choices, 
and we are going to continue to make hard choices. And we are going to 
make some mistakes along the way, but our intent needs to be, on a 
bipartisan basis, that we roll up our sleeves, we work together, and we 
find the best solutions possible. I am glad that on the Financial 
Services Committee we have a chairman and a ranking member who both 
step up to bring that kind of leadership in the continued tradition 
that was here when I came in 2005 under Chairman Oxley and then Ranking 
Member Frank. I am glad to be on that committee and will continue to do 
my part.
  I will mention one other thing. I happen to vice chair a coalition 
that's called the New Dem Coalition, which is a pro-growth caucus. And 
we have been very focused on pro-growth, pro-innovation solutions to 
some of the challenges that we are facing. I also happen to chair the 
task force for the NDC on Financial Services regulatory reform. And I 
have also appreciated the chairman's deliberative approach and feedback 
to some of the suggestions we have made to him for committee 
consideration relative to regulatory reform.
  We are focusing on regulatory performance. Clearly, the SEC's 
inability to determine that there was a problem that ultimately 
resulted in the Madoff Ponzi scheme suggests that we don't need more 
regulation, but better regulation, and a greater degree of best 
practices in the agencies who should be accountable for it.
  We are also working on addressing issues of market stability and 
transparency, making sure that we bring to the table some counters, or 
countercyclical mechanisms to offset the pro-cyclical nature of our 
system as it occurs currently, which has contributed to repeat cycles 
of booms and busts and booms and busts. And we need to be more 
prescriptive in working with our regulators to ensure that they 
consider and have the flexibility to weigh in on things relative to 
capital requirements. So as we see a bubble in formation, maybe 
increasing some of those requirements so as to encourage some 
deleveraging where clearly we were overleveraged. Conversely, when we 
are in a precipitous downfall, as we have all experienced recently, 
that is probably the time that the regulator should have the ability to 
consider easing up on those capital requirements so it doesn't require 
forced selloff of other equities as it did when we had the mortgage 
crisis, which created a more systemic-wide problem.
  We have to improve consumer and investor protections. And so we look 
at things like the credit default swap market, which has been roughly a 
$62 trillion unregulated market that left many counterparties out there 
and ultimately required Federal intervention to assist AIG in their 
downturn.
  Those are the kinds of things that we are working on. And we don't 
have all the answers, but we are working together on a bipartisan basis 
to find those solutions--and had a late night dinner this week. Those 
are the kinds of things that we are going to have to continue to do to 
bring real solutions to the table and help create an environment so 
that our businesses and our families are on a solid foundation that 
supports sustained growth as we turn our economy around.
  Thank you. And I yield back.
  Mr. CAPUANO. Mr. Speaker, I just want to take two seconds and show 
this chart.
  As you can see, this chart shows the number of subprime loans over a 
period from 1996 to 2005. Pretty obvious what happened. Within the 
first couple of years, subprime loans were reasonable, and a number of 
them given out. This entire time the House was controlled by the 
Republican Party, the entire time of this chart.
  As you can see from this hashed section, that is when the White House 
was taken by the Republican Party. And you can see what happened to 
subprime loans, they skyrocketed. They skyrocketed. And they didn't 
stop until 2008--actually, they didn't stop. They started slowing down 
in 2008 and they stopped in 2009.

[[Page 11132]]

  What happened in 2007 was the Democrats took over the House and they 
passed legislation to deal with this. That same legislation--or 
similar, I shouldn't say the same, but similar legislation was passed 
through the Financial Services Committee in the year 2005 that would 
have done the same things earlier. Now, it wouldn't have stopped the 
problems, but it would have lessened the problems. And this chart 
speaks for itself.
  It is amazing to me that people can blame others when the ones on the 
receiving end of that did not control this House, did not control the 
Senate, did not control the administration, did not control any of the 
appointments to any of the regulatory agencies, yet somehow they can be 
blamed for a lack of action. That is unbelievable rewriting of history. 
And I just think the people who know the facts will draw their own 
conclusions.
  With that, I would like to yield to the gentleman from Colorado for 
as much time as he would like.
  Mr. PERLMUTTER. Thank you, Mr. Capuano. And I appreciate the comments 
that you have made.
  I have a chart that shows exactly how much was done under the 
Republican Congress and the Republican administration in terms of 
reforming and revamping the GSEs, or, in other words, the Federal 
National Mortgage Association or the Federal Home Loan Mortgage 
Corporation, and what was done to deal with subprime lending during the 
Bush administration, and at the same time when Congress was in the 
hands of the Republican Party.
  My friends earlier today from the other side of the aisle were 
blaming everything on Democrats when they were in charge. Now, it is 
nice to try to lay blame when there is a realistic argument for laying 
that blame, but they can't do that. It simply is a fact that nothing 
was done to try to deal with what was becoming a tremendous housing 
bubble; that there were excesses in the way that lending was taking 
place, that restraints didn't exist, that regulation was being 
eliminated or ignored. And as a consequence, we had a tremendous burst 
of a bubble.
  And it is under the Democratic Congress, under the chairmanship of 
Barney Frank, that there has been a real effort to try to rein this in. 
So instead of having zero, this Congress, one of the very first things 
it did under the Democrats and under Chairman Frank's leadership was to 
begin reforming Fannie Mae and Freddie Mac. It was one of the very 
first bills that the Congress in 2007, when I was elected, when 
Congressman Ellison was elected, it was one of the very first things 
that we did, knowing full well that there were excesses with Fannie 
Mae, Freddie Mac, and the subprime lending. We still didn't have much 
success with the Bush administration. Certainly, the Obama 
administration is going to deal with this directly.
  We are in the process of working on subprime loans and predatory 
lending. We did finally get some Fannie Mae and Freddie Mac legislation 
passed at the end of last year. And now we can start regulating these 
kinds of vehicles, this kind of lending in a serious fashion, not one 
that is going to bring the market to a halt, but one that respects the 
fact that you can get out of control, and that is precisely what 
happened.
  I know my friend from Massachusetts read the quote from Mr. Oxley, 
who was the Republican chairman who tried to do something but was 
stalled by the Bush administration. But I think it again bears reading. 
He says, this was last summer, when we actually passed the Fannie Mae 
and Freddie Mac legislation and all of a sudden there were a lot of 
Republicans saying the Democrats should have done something about 
Fannie Mae and Freddie Mac earlier before there were any kinds of 
financial problems. And he said something, he fumes about the criticism 
of his House colleagues--this is Republican former Chairman Mike Oxley, 
``All the handwringing and bedwetting is going on without remembering 
how the House stepped up on this. What did we get from the White House? 
We got a one-finger salute.''
  So when there was an attempt, even under the Republican Congress, to 
try to reform things, the White House refused to do that. So that kind 
of gives you this big zero, what actually happened.
  The subprime chart that Congressman Capuano showed a second ago was 
another sign of the excesses that were taking place under the 
Republican Congress and the Bush administration. And then you see what 
we get from all of that.
  My friends on the other side of the aisle were complaining about the 
deficit and the debt that is being incurred right now, but it is that 
debt that was created under the Bush administration. The Obama 
administration has inherited a $1.3 trillion deficit; that's where they 
start. That is where this administration starts. And it starts with a 
banking crisis, a $1.3 trillion deficit, loss of jobs, and a housing 
crisis.
  What we are doing is to provide some funding so that people can buy 
homes at an interest rate that is reasonable. We are trying to stop the 
foreclosures that are occurring. So we are trying to stabilize the 
housing market and we are trying to stabilize the financial market.
  Now, much of what we did to try and stop the crisis or the fall of 
the financial markets was done last fall, really under a bipartisan 
effort of the Democratic Congress and the Bush administration, but it 
was in free fall. So the Obama administration is trying to get the 
financial markets on the right path again. It appears that that is 
going on.
  And then we really, this Congress and that administration, also under 
the leadership of Barney Frank, we came up with a stimulus bill, which 
is going to spur more jobs, creation of jobs, as well as a new energy 
economy, revamping education, and dealing with health care costs.
  Now I would like to give my friend from Minnesota an opportunity to 
speak about this, and we will then have a conversation.
  Mr. ELLISON. If the gentleman would yield, I want to ask the 
gentleman a question. Did the stimulus package also include the 
Neighborhood Stabilization Act, which is money, passed through the 
Democratic Congress, that would allow the neighborhoods to get money to 
help buy up some of these foreclosed properties? Did that happen?
  Mr. PERLMUTTER. It has. The underlying principle of the American 
Recovery and Reinvestment Act, the stimulus bill, is jobs, jobs and 
stabilizing the housing market, financial market. But what it does with 
the Neighborhood Stabilization Act is it starts to absorb foreclosed 
properties, takes those foreclosed properties, upgrades them, 
rehabilitates the properties, and makes them energy-efficient homes. So 
not only does it stabilize the housing market, it creates jobs by 
upgrading these homes to energy-efficient standards, and then helps us 
move to a new energy economy, which is one of the key points in the 
stimulus bill. So it really has so many facets to it, the stimulus bill 
does, to get us back on track after falling off a cliff, as you can see 
what happened under the Bush administration.
  I would yield back to my friend from Minnesota for any further 
comments; or I know my friend from Massachusetts is to be guiding all 
of us tonight, so wherever you would like to go.
  Mr. ELLISON. Well, you know what, I appreciate that, but I am going 
to toss it back to the gentleman from Massachusetts, who I think is 
going to toss it to the gentlelady from Wisconsin. I am happy to wait 
my turn in the line since I was one of the last ones here tonight.
  But I do appreciate the gentleman from Colorado's comments; I think 
they were dead on the mark. And I am very happy to be here tonight 
sticking up for the Democratic record and the leadership of Barney 
Frank on Financial Services reform.
  Mr. CAPUANO. There are just a few things I want to say before I pass 
it off to the gentlelady from Wisconsin.
  There are a couple of things that people have to understand; yes, 
Fannie and Freddie have some blame in it, like we all do, but they 
didn't do anything that everybody else wasn't doing as well. They 
didn't create credit default

[[Page 11133]]

swaps. They didn't create excessive leverage. Yes, they did invest in 
them heavily. Why did they invest in them heavily? They did it because 
the rate of return was so high they couldn't walk away, because that 
higher rate of return allowed them to then put more money up for 
mortgages. They didn't do anything that everybody else wasn't doing.
  So yes, we are talking about them tonight because they are 
government-sponsored entities, but a lot of this was created by people 
other than them, the private market.
  There is one other thing I do want to say. The other thing I have 
heard an awful lot of is that somehow the CRA, Community Reinvestment 
Act, is somehow to blame for all of this.

                              {time}  2030

  The CRA was a law that was passed because banks were happy to take 
money out of poor and lower income neighborhoods without putting any of 
it back in. People were allowed to deposit their money, but they 
weren't allowed to get mortgages. Simple law says, if you take the 
money out of these communities, you have to put some of that money back 
in.
  Nothing in the CRA says a single loan should be given that is 
inappropriate. Nothing in the CRA says a single loan should be done in 
an unsafe or in an unprofitable manner. That's not what it says. As a 
matter of fact, it says things just quite the opposite. It simply says, 
if you want to do business in a certain community, you have to then do 
business in that community. It's quite simple.
  One little fact: In 2006, 84 percent of the high-cost loans were 
originated by non-CRA covered banks. I'll say it again to make the 
point. Eighty-four percent of the loans given that were high-cost 
loans--all of these loans that mostly get a lot of people in trouble--
were not given by banks covered by the CRA. How could they possibly 
then or how could that law possibly have caused this trouble if they 
were only giving out 16 percent of the troubled loans? No one else is 
to blame, just the ones that they don't like.
  Mr. PERLMUTTER. Would the gentleman yield for just one second?
  Mr. CAPUANO. Absolutely.
  Mr. PERLMUTTER. I just have to go back to the quotes from Mr. Oxley, 
the Republican chairman at the time, trying to deal with excesses 
within the mortgage market. This is from the Financial Times, dated 
September 9, 2008.
  He says, ``We missed a golden opportunity that would have avoided a 
lot of the problems we're facing now if we hadn't had such a firm 
ideological position at the White House and the Treasury and the Fed.''
  With that, I'd yield back to my friend from Massachusetts.
  Mr. CAPUANO. I'd like to yield to the gentlewoman from Wisconsin for 
as long as she might take.
  Ms. MOORE of Wisconsin. Well, thank you so much, the gentleman from 
Massachusetts, the gentleman from Colorado and the gentleman from 
Minnesota. I'm very happy to participate in this Special Order tonight.
  I think that, while we're talking tonight, it's really important to 
raise some really uncomfortable issues. I have heard many people on the 
other side of the aisle talking about CRA--the Community Reinvestment 
Act--and about Freddie and Fannie as causal of our current meltdown of 
the financial market. Let's get real about this. CRA and Freddie and 
Fannie are all proxies for a discussion of race, so I want to talk 
about race and about the whole history of the Community Reinvestment 
Act.
  You know, I was out there, demanding as a community organizer that 
banks reinvest in communities in which they took deposits. I was one of 
the people demanding that they do it. Through extensive research, I was 
inspired, quite frankly, by a professor--now a professor at Georgetown 
University--who was a professor at the University of Wisconsin, Greg 
Squires, who found that minorities and particularly African Americans 
were being discriminated against in terms of getting prime loans.
  What Professor Squires found is that, even when you controlled for 
income and when you controlled for other indices of creditworthiness, 
African Americans were less likely to get a prime loan and that 
redlining was the rule of the day and that, if you lived in a minority 
community, especially in the black community, no matter what your 
income, no matter what your credit score, no matter what your 
creditworthiness, being black--being an African American--would either 
not get you a loan at all or it would get you a subprime loan.
  So the Community Reinvestment Act encouraged federally insured banks 
and thrifts to meet the credit needs of the entire communities that 
they served, including low- and moderate-income areas, that were 
consistent with safe and sound banking practices. The law was enacted 
in response to those of us who were out there who were concerned about 
disinvestment, and we produced evidence that lenders were 
systematically denying credit to certain communities, particularly to 
minority and low-income communities. They were actually practicing 
redlining.
  As you indicated, the gentleman from Massachusetts, you were 
incorrect to say it was 84 percent of the high-cost loans that were 
made. It was 84.3 percent of these high-cost loans that were made in 
the 15 largest metropolitan areas. So what happened?
  We went from CRA, which was a very good law, and Freddie and Fannie--
these government-sponsored enterprises. We found that, in 2004, our 
former President, George W. Bush, demanded that Freddie and Fannie take 
on more of these mortgage-backed securities that were being produced by 
these subprime lenders, the 84.3 percent who were non-CRA lenders, and 
required them to buy more of these mortgage-backed securities. Now, 
mind you, Freddie and Fannie didn't write one single subprime loan, but 
they also became prey to the predators.
  Now, why was there such a change of heart with respect to providing 
loans to minority communities? Because they found that there was a 
whole lot of money that could be made from these products, that there 
was a lot of money--a lot of moola--that could be made from these 
subprime loans. Low-income communities--minority communities--were 
targeted for these subprime loans.
  So they went from not lending them money at all to providing loans to 
then forcing Freddie and Fannie, without getting regulation or with no 
one watching, to buy these mortgage-backed securities.
  So I just want to get it straight here that, indeed, there were many, 
many, many loans made to African Americans and to Hispanics--people who 
were creditworthy, people who deserved prime loans. They didn't deserve 
these ARMs. Research and data are conclusive that African Americans, in 
particular, were given subprime loans even though they were worthy of 
prime loans. So I just don't want to hear it anymore.
  When you hear CRA, the gentleman from Colorado; when you hear Fannie, 
the gentleman from Minnesota; and when you hear Freddie, that's a proxy 
for ``we loaned to all of those black people, and that's why we're 
having this worldwide crisis.'' No. The reason we're having this 
worldwide crisis is because of greed, because of fraud, because of lax 
regulators, because of fraudulent appraisers, because of the 84.3 non-
CRA--non-Community Reinvestment Act--financial institutions in the 
marketplace, and because of race.
  Race was the single factor in determining over the course of the past 
30 years, first of all, who would not get a loan, who would be redlined 
against, and now currently who would, in fact, get a subprime loan.
  I would yield to the gentleman from Massachusetts in response to 
this. I know that race is extremely uncomfortable for people to talk 
about, but I think it's important to keep it real.
  Mr. CAPUANO. It certainly is uncomfortable for a lot of us, and it 
certainly is real. I totally agree with everything the gentlewoman just 
said.
  By the way, if it were a race item, in reality, wouldn't everyone 
losing their homes today be black? The answer is that it's not. It's 
across all lines. Blacks are losing their houses. Whites

[[Page 11134]]

are losing their houses. Hispanics are losing their houses. Why? We've 
all been victimized. I want to be clear. I want to repeat again:
  Fannie and Freddie didn't do anything that everybody else wasn't 
doing. I'm not saying they're not without blame. They are as I am and 
as, I think, everyone is. We all have some degree of blame. Okay. At 
the same time, what about those who were in charge at the time? I'll go 
back to the chart of subprime loans.
  During that entire time that subprime loans were charging upward, 
this House was controlled by Republicans. The Senate was controlled by 
Republicans almost that entire time. Particularly when they went 
through the roof, that's when they took over the White House. Why? Why 
did it happen overnight? Nobody sat down and said, ``Let's do subprime 
loans.''
  What happened is we got an administration at the White House that 
said, ``We don't need regulation. Let the market do whatever it wants. 
Let human greed go unregulated.'' Now, there's nothing wrong with human 
greed. We're all greedy. It's what drives a lot of us--we all want 
more--but unfettered greed, unregulated greed, unlimited greed always 
leads to disaster. It always does. We had an administration that 
believed the market could regulate itself, period. Now, the market can 
regulate itself to some degree, but when you say to the SEC, ``Do 
nothing. Look the other way on credit default swaps. Sit on your hands 
when anybody comes up with new instrumentations and when banks have 
special investment vehicles that are off the books,'' this is the 
result.
  Congress has some blame. No question about it. Personally, I should 
have screamed louder. Now we have the votes. Those people with the 
votes should have done something.
  I want to point to the chart behind the gentleman from Colorado 
again. During the time period when Republicans had control, they did 
nothing. Nothing. Since we took over--and I'll go through the litany 
later because I'd like to yield to the gentleman from Minnesota--we 
have taken action. With action sometimes--there's no question about 
it--the horse is out of the barn to some degree. You can only do so 
much when that has happened, but we have done what we could do when we 
could do it. We will continue doing it this week and again next week.
  With that, I'd like to yield to the gentleman from Minnesota.
  Mr. ELLISON. Well, actually, I'd like to address the question that 
was raised by Congresswoman Gwen Moore from Wisconsin. I'd like to pose 
a question to her, and this question is going to take a little buildup, 
so bear with me.
  Ms. MOORE of Wisconsin. Okay.
  Mr. ELLISON. Now, if you were responsible for deregulating the 
markets and if you were responsible for unleashing the wildest impulses 
in human nature--greed among them--and if you presided over a 
catastrophic increase in the budget deficit as you cut taxes for the 
wealthiest Americans and if you let loose a war in Iraq that should 
never have been fought, after it all came crashing down, wouldn't you 
be looking for somebody to blame? Well, you might just blame the people 
who are the most vulnerable in our economy, and that is what is at the 
very root of the CRA mess.
  You can't possibly expect people to accept responsibility. Look, when 
you look at these crossed lines here, this is when the party opposite 
ran the whole shooting match. This is when they had the White House and 
this House and the other body--the Senate. They ran the whole shooting 
match, and we got a big, fat, enormous, giant goose egg out of it as it 
relates to any kind of financial regulation.
  As soon as the 110th Congress broke out and when we finally got a 
chance to do some regulation, what did we see? Through this House, we 
passed the shareholder vote on executive pay, the so-called ``Say-on-
Pay.'' If you were upset, frustrated, angry or were in any way annoyed 
by the AIG scandal and by the executive pay or by any of this stuff, 
you can know and feel good about the fact that it was the Democratic 
Congress and the Financial Services Committee, under the leadership of 
Barney Frank, that passed Say-on-Pay, which said, ``You know what? 
We're going to let those investors have a say-so over these executive 
pay packages. We're going to do that.'' That was passed in the 110th 
Congress, but it wasn't made law. It was passed through the 110th 
Congress.
  Not only that, we did pass legislation to bring in regulation and 
oversight to the Office of the Federal Housing Enterprise Oversight. 
OFHEO was moved out, and the Federal Housing Financial Agency was moved 
in.
  So, yes, the problems that the gentleman from Massachusetts 
identified with Fannie and Freddie were there. They did buy too many of 
these mortgage-backed securities. But what happened in the 110th 
Congress? We responded. We did something. We did not leave it to go 
unattended.
  Not only that, we passed the Credit Cardholders' Bill of Rights in 
2008, and we passed it again, and we're going to pass it again on the 
House floor tomorrow. I'm so excited about that. Let me just say 
something about it as we slow down to talk about it.
  While we were debating the bill on the floor today, we had a good 
friend of mine speak, a gentleman whom I actually quite enjoy listening 
to, a gentleman from Texas. He's a fine man, but he's fond of saying, 
``Okay. You guys are talking about predatory lending, but what about 
predatory borrowing?'' You've heard this phrase, right? Well, let's 
talk about predatory borrowing for a minute.

                              {time}  2045

  When somebody gets an extra amount of money called a yield spread 
premium to steer you to a high cost loan and it makes them money to do 
so, that's how you get people getting into loans they are not supposed 
to get into. They get into loans because the people they trust, the 
mortgage originators who they rely on, are incentivized to do so.
  What are we doing about it in the 111th Congress? We're addressing 
this practice right now to try to say no, it's your job to look out for 
the borrower. You have got to look out for the borrower. You can make 
more money by doing a lot of loans, you can make more money doing 
bigger loans, but you can't make more money simply by steering somebody 
to a high-cost loan. That is going on now.
  We passed the Credit Cardholders' Bill of Rights Act in 2008, and 
we're going to pass it again very soon, and, God willing, it will be 
law in the very near future.
  But not only that, the gentleman from Colorado talked about passage 
of the Neighborhood Stabilization Act. This is a bill that directed the 
Secretary of Housing and Urban Development to make loans to qualified 
States, metropolitan cities and urban areas in accordance with HUD 
approval grants to carry out eligible housing stimulus activities, 
which included greenification--is that a word? Greening. Renewable 
energy. And also buying up houses so that you wouldn't have these 
vacant, boarded-up places that were an attractive nuisance for 
everything from arson to young people getting dragged into these places 
and copper strippers and all the rest.
  I submit today that the Democratic Congress, since we became the 
majority, has been actively engaged in financial regulation. We have 
been actively engaged in trying to look out for the American consumer. 
We have been trying to bring stability and liquidity to the financial 
markets. And I will submit that in the 110th Congress and the 111th 
Congress, the majority has demonstrated--and some Republicans have been 
smart enough to vote with us--and say yes, America is a free market 
society. We believe in the generative power of markets. We believe 
markets should be allowed to run, but we know human nature needs some 
restraint sometimes, and we need to have some rules to this game, and 
thank goodness this is happening right now.
  So look forward to the American Recovery and Reinvestment Act which 
put real financial change in, the Credit Cardholders' Bill of Rights 
Act of 2009, and the Mortgage Reform and Anti-Predatory Lending Act 
which was

[[Page 11135]]

passed in 2007 but hopefully will become law in the weeks to come and 
which should be on the House floor in the very near future. That's what 
I call being a good steward, that's what I call being a financial 
leader, and that's what I call the leadership of Barney Frank from 
Massachusetts. I am proud to be on the committee.
  Mr. CAPUANO. I would like to thank the gentleman.
  I would like to just read one little fact. May 25, 2005, there was a 
vote in the Financial Services Committee of the House that was then 
under the control of Republicans. The chairman was Mike Oxley, who's 
been mentioned here a couple of times. I knew him. I served with him. 
He was a good man. He was a true conservative. But he was a good man. 
He fought for his ideals as we all fight for ours. And he, at that 
time, had control. He won a fair number of times, but he would talk to 
you openly, honestly, and didn't pull any punches.
  Chairman Oxley at the head, Representative Frank as the ranking 
member of the minority party, May 25, 2005, H.R. 1461, a vote of 65-5. 
Every single Democrat and, obviously, most of the Republicans on that 
committee voted for a reform bill of Fannie and Freddie. That bill came 
out, went to the Rules Committee, and was changed. Dramatically 
changed. Why was it changed? Pure ideology.
  The Republicans--as the Democrats do now--if the Democrats stick 
together, we can pretty much pass any bill we want out of Financial 
Services or any other committee. That's the way the House works. At the 
time, the Republicans were in the majority. They could have passed any 
bill they wanted without a single Democratic vote if they chose to do 
so. Chairman Oxley preferred to take an important issue and work hard 
to get bipartisan support. And he did.
  My colleagues here all serve on the Financial Service Committee. You 
can't name me too many times we have a rollcall vote that we get a 65-5 
vote on any issue of major importance today or almost ever. I have been 
on the committee 11 years now. It almost never happens. That is hard 
work. That is work that deserves credit. That is work that says it's a 
serious issue that should rise above ideology of either side. The bill 
wasn't perfect, in my opinion, but it was pretty good. And it was the 
best we could get at the time. We were in the minority. Understand 
that. Something is better than nothing.
  So 65-5, the bill comes out and gets tossed aside by people that 
didn't know much about the issue, yet ran this House, because of 
ideological purposes. That tells you--I think it should tell you--there 
was an attempt to take action even in 2005. When that happens, you send 
the bill out, the committee has done its work, you think everything is 
going well, you think people are in agreement; and when the leadership 
of this House says, ``Forget about it. We're doing what we want to do 
on an ideological basis. We don't care about this bipartisanship,'' 
that tells you, don't even try this again. Don't waste your time. And 
there was nothing else that happened until Democrats took the House 
back, and we acted quickly. Representative Ellison just listed a whole 
bunch of those items, and as he said, we're doing more today.
  Mr. PERLMUTTER. Would the gentleman yield?
  Mr. CAPUANO. Yes, I would.
  Mr. PERLMUTTER. And I think that's the important point here. We want 
to explain to anybody who might be listening within this House. This is 
in an effort to be bipartisan. There was in 2005. There was when we 
took the control of the Congress in 2007 and 2008 and now 2009. Barney 
Frank seeks that in every single vote and every single bill as we go 
through this, and then so does the President of the United States, 
Barack Obama. But we're not going to sit on our hands and allow the 
country to just stall out.
  I mean, some of my friends on the other side, their mantra is ``Just 
say no. We like the status quo.'' We can't afford the status quo any 
longer. So we're going to stabilize the housing market and the 
financial markets, we're going to stimulate this economy, and we're 
going to place back into the system reasonable regulations so that 
America can really get back on track. And we see signs of that today.
  It's going to be a rocky time and a steep hill for us to climb, but 
we are turning the corner. I am just proud to be part of this Financial 
Services Committee with my friends here under the chairmanship of 
Barney Frank and under a presidency of Barack Obama.
  With that, I return the message to my friend from Massachusetts.
  Mr. CAPUANO. I recognize the gentlewoman from Wisconsin.
  Ms. MOORE of Wisconsin. Thank you.
  I really agree with your sentiments, the gentleman from Colorado, 
that it's time to move forward. I only arrived here in the 109th 
Congress, and I was here for one session in the minority. But what I 
experienced then was Barney Frank consistently working to try to reduce 
the systemic risk even before Paulson and Bush came and said, we're 
having a problem.
  I remember the Federal Housing Financial Reform Act, to try to 
provide a good regulator for Freddie and Fannie, something that hadn't 
happened under Republican control. And, of course, no action was taken 
in the Senate. So thank God we've got maybe 60 votes now so that that 
won't be stalled out.
  I saw Barney trying to provide what we did today, the Mortgage Reform 
and Anti-Predatory Lending Act of 2007. He tried to do it before today. 
Of course, that stalled in the Senate. So thank God we have 60 votes 
now. Maybe some of his initiatives can go forward.
  I remember taking a codel with Barney Frank to London and Brussels 
where we talked about systemic risk, worldwide, long before anyone was 
owning up to the financial meltdown.
  So Barney Frank has really been on point, and hopefully with a 
Democratic majority and someone in the White House, his continued 
efforts to rein in systemic risk will not be stalled out as they have 
in the past.
  Mr. ELLISON. Barney Frank with a tremendous intellect, with a 
tremendous sense of humor, with a bipartisan spirit and an even hand 
has shepherded great legislation to help stabilize America and begin 
our ascent once again.
  I want to say that even on the Credit Cardholders' Bill of Rights, a 
bill that I am emotionally involved in, I feel so good about, we got 
nine Republican votes and a bunch of Democratic votes.
  Look. Even a lot of Republicans know that we have been doing the 
wrong thing by neglecting regulation. It's time for us to put all this 
squabbling aside and say no matter what the party is, no matter what 
party you may belong to, Democrats are just better at running the 
economy. I like Republicans. Some of my best friends are Republicans. 
My dad is a Republican. I think they're great.
  But if you want good regulation that helps the economy grow, you can 
look at the 110th and 111th Congress for an example of who knows how to 
do that. It's happened successfully. It will continue to happen. And I 
bet you when that Credit Cardholders' Bill of Rights hits the floor of 
this House and I bet you when the anti-predatory lending bill hits the 
floor of this House, we're going to get a bunch of Republican votes 
because even they know that the Democratic Party is a good financial 
manager.

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