[Congressional Record (Bound Edition), Volume 155 (2009), Part 8]
[House]
[Pages 9795-9802]
[From the U.S. Government Publishing Office, www.gpo.gov]




                              {time}  2200
                           LENDING REGULATION

  The SPEAKER pro tempore (Mr. Foster). Under the Speaker's announced 
policy of January 6, 2009, the gentleman from Iowa is recognized for 60 
minutes.
  Mr. KING of Iowa. Mr. Speaker, I appreciate being recognized to 
address you here on the floor of the United States House of 
Representatives. And I want to say, at the departure of the chairman of 
the Financial Services Committee, I appreciate his yielding to each of 
us who have differing opinions on his presentation this evening. And 
that is something that I'm prepared to do should the gentleman raise an 
issue with statements I make. I know that Mr. Frank is competitive and 
very willing to engage in debate. And I know that he had a lot of 
things he wanted to get off his chest tonight. I was here to listen to 
it all. And I heard every word.
  Mr. FRANK of Massachusetts. Would the gentleman yield? Yes, I think 
it would be a very good idea if instead of--and I thought it was catch-
up time for me. But when we come back, I would like to have, and we can 
do 2 hours, we can have one D and one R, and have 5 minutes each. We 
can have a fair debate thing. I look forward to debating these. So I 
thank the gentleman for that. And when we return, I'm going to ask my 
staff to start getting some hours and we can work with Members on the 
other side. Let's have some genuine debates on these issues. And I 
thank the gentleman for the spirit in which he said that.
  Mr. KING of Iowa. I thank the gentleman, and I will say into the 
Record tonight, that is a request that I would be happy to meet with, 
and I will be looking forward to the time when we come back on the 
other side of Easter. I appreciate it.
  Again, Mr. Speaker, I listened to the statements made on the part of 
the chairman of the Financial Services Committee tonight. And it occurs 
to me that a man who has the full attention of the entire committee on 
any day he decides to choose to hold a hearing or a markup, a man who 
has full attention of the floor when he decides to speak here, it seems 
to me that since we have been through 2 days of budget debate, Mr. 
Speaker, that there must have been a lot of things that the chairman of 
the Financial Services needed to get off of his chest. And I heard a 
lot of them tonight. It occurs to me, though, that there is a high 
degree of sensitivity. And where I come from, when you throw a rock 
into the pigpen, the one that squeals is the one that you hit.
  So I think what I heard is a rejection of the concept that the 
gentleman from Massachusetts and many of the Democrats that followed 
him in his leadership on these financial services issues, a rejection 
that he resisted the idea of regulating Fannie Mae and Freddie Mac, 
resisted the idea that the Community Reinvestment Act was a component 
of the financial meltdown that we had. And I heard the gentleman say to 
us that there were three Republican amendments on the legislation that 
would have and could have regulated Fannie Mae and Freddie Mac. I 
raised the issue of one. And I do remember the day. It was October 26, 
2005. It was an amendment that was offered by Mr. Leach of Iowa that 
would have regulated Fannie Mae and Freddie Mac down the same lines as 
the regular lending institutions who are providing mortgage loans and 
real estate. I think that would have been a good thing to do. And I 
recall that debate. And it was a compelling argument made on the part 
of Mr. Leach that Fannie and Freddie were underregulated and 
undercapitalized, and they needed to be capitalized more and regulated 
more. Now I have just heard the gentleman from Massachusetts say that 
Republicans are afraid of regulation. In fact, it is the ``fear of 
regulation,'' he has said, that drives Republicans to reject changes in 
the control of the financial institutions in this country.
  I would submit that we are for regulation. We are for the kind of 
smart, responsible regulation that ensures that we have viable lending 
institutions. In fact, we came to this floor and supported amendments 
that would have capitalized and regulated Fannie Mae and Freddie Mac. I 
have introduced legislation that would repeal the Community 
Reinvestment Act. And I have introduced legislation that would 
capitalize Fannie and Freddie Mac like the other lending institutions 
and move them towards privatization. I recall the debate that evening 
on October 26, 2005, when the gentleman who is now the chairman of the 
Financial Services Committee, and I don't disagree with his 
characterization here, it is a matter of emphasis, it is not a matter 
of accuracy, at least the disagreement on the accuracy, but I recall 
that. And it was that he would not support a bailout of Fannie Mae and 
Freddie Mac because he didn't believe that they were undercapitalized, 
underregulated or in trouble.
  Well, it turns out that was October of 2005, and easily, by the late 
fall of 2008, we can all see that Fannie Mae and Freddie Mac were in 
trouble. In fact, they have been nationalized. And the risk and the 
liability that comes to the American taxpayers was calculated at the 
time to be about $5.5 trillion. Now the taxpayers own Fannie Mae and 
Freddie Mac. And regardless of whether there was a majority of 
Republicans that supported or opposed the amendment that would have 
regulated and capitalized Fannie and Freddie, it is true that the 
chairman of the Financial Services Committee opposed those

[[Page 9796]]

amendments. And I think he underestimates has own persuasive powers. In 
fact, he must have gotten here for some reason. I think persuasive 
powers are part of it. I compliment him on that. I think he is an 
engaging fellow who has a very nimble ability to engage in this debate. 
And I look forward to those kind of debates, and I know I will be 
tested. But it remains a fact that some of us wanted to regulate Fannie 
Mae and Freddie Mac. Some of us wanted to move them towards 
privatization. Some of us wanted to capitalize them more. Some of us 
wanted to regulate them more. I am among those people. The voting 
record and the Congressional Record indicates something else on the 
part of the current chair of the Financial Services Committee. I don't 
think the Republicans have been opposed at all to regulations of our 
financial institutions. We have been in favor of smart regulations of 
our financial institutions, to essentially fix this problem ourselves.
  So there is not a fear of the right wing that regulation is coming. 
There is a fear that we had an underregulation, and that is why we 
brought those amendments and brought that legislation. That is why the 
gentleman from New Jersey brings up the issue of Mr. Baker from 
Louisiana.
  I would be happy to yield to the gentleman from New Jersey.
  Mr. GARRETT of New Jersey. To the gentleman from Iowa, I appreciate 
your organizing this hour on the floor. And I came here ostensibly to 
talk about the issue affecting the American public today, and that you 
touch on it at the end there as far as the regulation of our financial 
system. But inasmuch as the chairman of the Financial Services just did 
spend the last hour addressing the sub issue of that is whether the 
charges against him, whether they were legitimate, was the basis of his 
discussion for the last 55 minutes whether it is legitimate as some on 
this floor and outside in the media as well and other groups and what 
have you and have accused him of being primarily or ostensibly 
responsible for some of the problems that we now find ourselves in.
  I will just spend a minute, even though he spent 55 minutes, on that. 
As I said before, in Congress there have been various champions on 
either side of this issue. Richard Baker, when I came to Congress and 
you came at the same time, was a champion of trying to rein in the 
excesses that were in the GSEs, Fannie Mae and Freddie Mac. There were 
other people on the outside, as well, actually in the Bush 
administration. He chastised the Bush administration for not pushing 
this legislation and putting other impediments of going forward with 
it. The truth of the matter is that the Bush administration in the form 
of the Secretary of the Treasury, I believe it was both Snow and 
Paulson, who came to the Financial Services committee while I was 
there, and said, there are problems in the GSEs. There are problems in 
the Fannie Mae. There are problems in Freddie Mac. And they were ones 
that the Bush administration was, in fact, pushing for some sort of 
control, some sort of limitation, some sort of reining in of the GSE. 
So the Bush administration was doing that.
  Richard Baker, who was always sitting up in the top row way above me 
since I was a freshman and a sophomore at the time, was championing 
that cause as well to say how do we rein them in? And I became involved 
with it, and I put in some amendments myself, and one was to direct the 
new regulator to establish limits on the GSE's portfolios in case there 
were any issues of safety and soundness or possible systemic risk, a 
word that we discuss now.
  Representative Paul offered amendments to cut off Fannie and 
Freddie's $2 billion line of treasury which would have been one of the 
key aspects of sending a message to the private markets as to whether 
they can believe or not, whether the Federal Government were to stand 
behind them. I know the chairman just said, and he said repeatedly, 
``to those investors who believe that when they are investing in the 
GSEs that the full faith and credit of the United States Government 
would stand behind them, I'm telling them right now it is not the case. 
Well, that, of course, was the case. It was an implicit guaranty. It 
became explicit, however, when things began to fall apart in the last 
year, and now you and I know what has been the cost to the American 
taxpayer, literally hundreds of billions of dollars.
  But the chairman did say, as far back I think it was, as in the year 
2000 which before I was even there, when the Bush administration was 
pushing these issues saying there are some problems here, he said he 
did not see, the chairman said, actually he would have been the ranking 
member at that time, he did not see the need for the further 
regulations because he said ``there are no problems here.'' And he did 
it again I guess in 2003, saying, again, he did not see a problem with 
those, either one of those companies. I know later on he did say that, 
probably in 2003, any one of us would have said the same thing with 
regard to other banks, the Bank of Scotland or some other banks what 
have you, there wasn't any problems there, and now, of course, we 
know--I shouldn't have mentioned this particular bank that he had 
said--but other banks back in 2003, a lot of us would not have said 
there were problems in those banks. But we are talking about a 
different level of problems with that situation.
  Today we are having problems with those banks, with their 
investments. With the GSEs, the argument that a number of us on our 
side of the aisle was making, that President Bush's administration was 
making as well, was a systemic risk, that by allowing basically 
unfettered lending by these institutions and by the implicit guaranty 
that the Federal Government placed behind them by the $2 billion line 
of credit, you place a systemic risk. And by putting no limitations on 
either one of those organizations, you allow them to borrow and borrow 
and borrow with no limitations on their portfolio, which is something I 
and others were pushing strongly to try and rein them in, you create a 
systemic risk. So, yes, there was obviously a systemic risk both in 
2003 and 2000 as well, until it finally exploded to what we have today.
  So I think that is where the outside groups, maybe some Members in 
this Congress, try to say, that some Members were pushing for tighter 
regulations, others were leading the fight saying there wasn't any 
problem, that you didn't need it, so that in 2005 the facts were some 
of us were actually going to committee, and I don't have them all here, 
but I was going to committee and saying, here are some other bills, 
yes, he is right, a lot of Republicans voted against those bills as 
well, but he was obviously the ranking member and saying that there was 
no need for those.
  And I will yield back.
  Mr. KING of Iowa. I thank the gentleman. Reclaiming my time, as I 
listen to that, and you lived in the middle of the Financial Services 
Committee for these years into the seventh year, and that is background 
and experience that hardly anybody in America has shared with you, Mr. 
Garrett, and so I just ask you if you could, in the middle of this, 
throughout those, beginning into the seventh year at least, 
characterize the general philosophy that you gathered with regard to 
the thrust now of the committee and the majority within the committee 
as to whether before this financial meltdown, this economic crisis that 
we have, did you sense that there was any initiative on the part of the 
Democrats in the Financial Services Committee to regulate Fannie and 
Freddie, to capitalize Fannie and Freddie and move them towards any 
kind of privatization, or would it have been more or less business as 
usual with Fannie and Freddie? Which way was that line going from the 
Democrat side on the Financial Services Committee? And I yield.
  Mr. GARRETT of New Jersey. I guess it would be a fair generalization 
that from the other side of the aisle that the push was, the emphasis 
was for the GSEs to focus on their public housing program, in other 
words, that they should be created, although that was actually a change 
in their original mission, as you know, but that new changed mission 
was to say, how can

[[Page 9797]]

they be used to advance the cause of affordable housing? And so that 
was always the posture from the other side of the aisle. And that is 
why there was constant pushback when Ed Royce or other Members on our 
side said, well, maybe we should put some limitations on one of my 
amendments, on the portfolio, rather the conforming loan limits, to say 
that it shouldn't be too high. Well, no, they want to have no 
limitations, or the portfolio limits, no, there should be no 
limitation. So it is always clear they were in one direction and we 
were slightly in a different. I yield.
  Mr. KING of Iowa. Reclaiming, from the gentleman, if he would further 
examine this question, I understand their response that the Bush 
administration was very much focused on increasing the percentage of 
homeownership. And I recall a State of the Union address made by 
President Bush here in this Chamber one of those Januarys that made the 
statement that we had the highest homeownership of a free country in 
the world, or at least the United States, that 68 percent of the people 
in America lived in a home that was owned by themselves or one of the 
people that lived in the home with them. It does sound like it is a 
laudable goal. And it is certainly a goal that would be reached for, 
that was reached for by the Bush administration. It would be something 
that would be reached for I think by all of us, Democrats and 
Republicans alike.
  But from the restraint side of this, from those who were lending a 
voice of caution, that were saying Fannie Mae and Freddie Mac, the 
secondary market for mortgages, are getting out of control, they are 
undercapitalized. They are underregulated, and we need to rein them in 
before we have a problem that is far bigger than the one that is 
apparent today. If you had to give credit or blame to Republicans or 
Democrats in the Financial Services Committee, Mr. Garrett, where was 
the predominant voice for caution? Where was the predominant voice for 
capitalization? Where was the predominant voice for regulation? Where 
was the predominant voice for privatization of Fannie and Freddie 
during those years before the crisis was evident to all of us?
  Mr. GARRETT of New Jersey. Well, my dad always said give credit where 
credit is due. And the chairman was correct to say that those of us who 
were really strongly pushing these issues didn't get as much support as 
we would have liked to from our colleagues on this side of the aisle. 
But as I look at some of the other amendments I put in, I got almost 
virtually no support from the other side of the aisle for some of our 
amendments which would have put in limitations. For example, I put in 
an amendment that would require the GSEs to hold only mortgages and 
mortgage-backed securities that exclusively support affordable housing.
  Now there is an idea if you think about it, if the idea behind the 
GSEs, one of the functions is to support affordable housing, then if 
you put that amendment in, it should fall in line with what the other 
side of the aisle was advocating. And they should support it. But there 
is another side benefit to allowing them to expand and grow outside of 
the area of affordable housing and that basically helps their balance 
sheet and also helps the remuneration to the people at the top of the 
organizations, to their CEOs, because if their balance sheet is good 
and their profits are based just like AIG, these bonuses and what have 
you, it benefits them as well.

                              {time}  2215

  But we got no votes, well, from the chairman, I'm certain of, but 
basically from everyone from the other side of the aisle.
  My good friend, I'll explain one other amendment. The portfolio 
limitation, Representative Price offered that amendment as well. Same 
thing, to reduce the amount of the GSEs portfolios again. I do recall 
that the chairman was opposed to that, and I believe that just 
generally speaking, no support from the other side of the aisle.
  So I think that's the underlying message that's probably out in the 
media and outside of this House as well, as to where the two parties 
stood on it. Maybe we didn't have as much support as you and I would 
have liked from our side, but clearly it was a one-sided push for a 
long time of seeing that there was a systemic problem and trying to do 
something about it.
  Mr. KING of Iowa. And reclaiming my time from the gentleman from New 
Jersey, and I thank him for his historical rendition of what's taken 
place within the committee. And I would take this a little further and 
ask this question, and that would be, did the subject of reform of the 
Community Reinvestment Act or the repeal of the Community Reinvestment 
Act come up in the Financial Services Committee in the years prior to 
the financial crisis that emerged here in this Congress, I am going to 
pick a date, September 19 of last year? Was there discussion dialogue 
in the committee, and did it take place in a way that would have 
illuminated the circumstances we have today, and does the gentleman 
from New Jersey accept the premise that was delivered by the Chair of 
the Financial Services Committee that only 1 out of 25 lenders were 
affected by restraints in Community Reinvestment Act? Does that seem to 
be a balanced delivery, or would there be a particularly different 
viewpoint that the gentleman would like to discuss?
  Mr. GARRETT of New Jersey. Well, I'm certainly not going to question 
the statistics of the chairman because I believe he was holding a paper 
or had some other statistics before him. Since I don't have them, I'd 
certainly take the chairman at his word.
  I think though that you have to see the larger issues that came out 
of that. And the message that the government was sending, whether 
through that or through other mechanisms, did have a profound impact 
upon the rest of the marketplace, not only in the low-income area but 
otherwise, not only through that program, but through the Federal 
Reserve regulations, the Boston Fed issuing certain guidelines, if you 
will, as far as lending practices, and that had profound impact, not 
only on those institutions as the chairman made reference that may come 
under their auspices or their control or their authority, but through 
the rest of the marketplace as well.
  In other words, once you sort of get the ball rolling as far as what 
the new underwriting standards, and this is really what was being 
created during this time, in one segment of the market, that ball was 
just continued right across the rest of the marketplace as well. Some 
of us, as I said before, seeing that as just the beginning piecemeal of 
this was rolling out we said there may be a problem as that ball goes 
along and grows, gains weight and what have you and has impact 
elsewhere, and eventually we saw that it was picked up by the rest of 
Wall Street.
  Mr. KING of Iowa. I thank the gentleman. Reclaiming, I think this 
might be a good time for me to lay out how I think the sequence of 
events took place with the economic crisis that we are in. And I'd ask 
the gentleman's indulgence and analysis of whether he would agree with 
this particular analysis.
  But I would take us back, Mr. Speaker, to 1978, to the inception of 
the Community Reinvestment Act. The Community Reinvestment Act, I 
think, was passed for the right motivations, and the idea was that we 
had lenders that were redlining districts. They were drawing a red line 
around districts in particular cities and refusing to loan for real 
estate in those districts because the value of that real estate was not 
being sustained, and it was declining. That was maybe the right kind of 
motive to do that. But as we moved on from 1978 until the nineties, 
when the Community Reinvestment Act was refreshed under the Clinton 
administration, and it got a little tighter, it essentially said this, 
that if you're going to be a lending institution that will--that is 
inclined to want to expand, you're going to have to make loans into 
these neighborhoods that were heretofore redlined. And we're going to 
need you to have a certain percentage of the loan portfolios go into 
these communities that were red-lined around them and provide those 
loans to

[[Page 9798]]

lower-income people. So the bottom line was, the Community Reinvestment 
Act was a regulation that put an incentive in place to give loans to 
people that didn't have a record of being able to pay it back and 
provided a merit for the lenders to do that if they were going to 
expand. So it was a perverse incentive. It essentially was an incentive 
that said to lending institutions, if you want to grow, you're going to 
have to make bad loans. That was the Community Reinvestment Act. Fresh, 
new 1978, refreshed in the early nineties, about 1993 or 1994 under 
Bill Clinton. And that became a foundational piece of legislation that 
didn't seem to be a very big problem except for a couple of things. One 
of them was, during the last years of the Clinton administration, Mr. 
Speaker, the technology that we've developed, the ability to store and 
transfer information more efficiently than ever before created the dot-
com bubble. That existed because investors understood this ability to 
store and transfer information more effectively and more efficiently 
than ever before. And they invested in that ability. And they didn't 
make the corrections for the necessity that that ability to store and 
transfer information needed to translate into more efficiency in our 
economy, the ability to produce goods and services or deliver them more 
effectively. That was, Mr. Speaker, the dot-com bubble. So the dot-com 
bubble came about because of technological success, and let me call it 
an irrational exuberant optimism about the benefits that would come 
from that ability to store and transfer information more effectively 
than ever before. So we had a dot com bubble through the second half 
the Clinton administration. Part of the reason there was a balanced 
budget in this Congress was because, 1, the Republican majority here 
was determined to slow down and shut down spending and the growth in 
Federal Government, and they did that effectively. The new 
revolutionaries that arrived here, elected in 1994 and sworn in in 
January of 1995, were determined to produce a balanced budget, and they 
did. Part of it was out of fiscal conservatism, and part of it was out 
of resistance to the Clinton administration. But whatever those 
proportions were, we had a budget surplus for a number of those years. 
And we had a dot com bubble in the market that was not adjusted to 
rationality. And when the lawsuit was brought against Microsoft, that 
was the needle that penetrated the dot-com bubble until it burst. And 
when it did, we had a declining economy. A declining economy because of 
the aftermath of the collapse of the dot-com bubble, translated into 
the beginning of the George W. Bush administration, the first 
administration of his, when he was elected in 2000. And Mr. Speaker, 
when that took place, we needed to do some adjustments to recover this 
economy and we had Alan Greenspan look at this and concluded, I 
believe, and by reports that I've read, not characterizing his inner 
thoughts necessarily, that we needed to stimulate the economy. That 
brought about decisions made that resulted in unnaturally low interest 
rates, especially on mortgage lending, which created an unnaturally 
exuberant housing economy. This unnaturally exuberant housing economy 
that came about from unusually low interest rates was something that 
helped bring us out of the decline in our economy that resulted in the 
burst of the dot-com bubble, Mr. Speaker. And as that was finding its 
place in this economy, we were attacked on September 11, 2001. Our 
financial centers literally collapsed. We lost 3,000 American lives all 
in the matter of a few hours. And we needed to do something to 
stimulate the economy.
  And so the President of the United States, George Bush, this Congress 
came together and decided to quickly enact some tax cuts and a stimulus 
policy. That was 2001. That bridged a small gap, and they weren't all 
that particularly effective.
  But on May 28 of 2003, the real Bush tax cuts were enacted, and they 
were the reduction in capital gains, the reduction in interest and 
dividend income, and that resulted in a real economic growth. But as 
this economic growth came from the Bush tax cuts, we also had economic 
growth that came from the unnaturally low interest rates and this 
housing market that was created by those low interest rates, and we 
found our way through to this point now where the foundation of our 
economic difficulty, rooted in the Community Reinvestment Act, flowing 
through from, as I didn't mention, Fannie Mae and Freddie Mac, a 
refusal of this Congress to regulate Fannie Mae and Freddie Mac, even 
though we had legislation that was brought before the Financial 
Services Committee, as Mr. Garrett has described, even though there 
were amendments brought to this floor, which I actively worked for and 
supported, that would have capitalized Fannie and Freddie, and 
regulated Fannie and Freddie, those things were resisted by the current 
leadership, the people that say it wasn't their fault, it was 
somebody's else fault, seems to be always Republicans fault. But this 
is a historical document. It can all be read. It all flows through.
  In the end, we got to this point where not only was there a dot-com 
bubble that burst that I think stimulated the unnaturally low interest 
rates that put us in the place where we had the housing bubble that 
burst, but the housing bubble was created not just because of 
unnaturally low interest rates, but because lending institutions were 
given an incentive under the Community Reinvestment Act to give bad 
loans in bad neighborhoods, and Fannie Mae and Freddie Mac were 
undercapitalized and under-regulated, and there was a perverse 
incentive for them to pick up these secondary market loans and tranche 
those and roll them on up the chain.
  And while that was going on, we had mark to market accounting, which 
is a good process when you have a market that's going up, and if you 
have a market that's going down, it accelerates the decline. It was a 
brutal and horrible self-inflicted wound, the mark to market accounting 
component of this.
  While this was going on, additionally, we had a Congress that again 
refused to regulate Fannie Mae and Freddie Mac, and you had AIG that 
was insuring these mortgage-backed securities and these bundles of 
securities, and they had such a large market share there was nobody in 
the country that could look over their shoulder and pass judgment upon 
their evaluation of the risk.
  And so we had a market that was under-regulated, a market that wasn't 
indexed back to the real estate value that underlined the bundles of 
toxic debt that we call it today, the mortgage-backed securities. 
That's how we got here.
  There were many people that made mistakes along the way. And there 
was a failure to be clairvoyant on the part of all of us. But the 
voices that I have heard, there's been many voices that said, from my 
side of the aisle, capitalize Fannie and Freddie, regulate Fannie and 
Freddie. The Community Reinvestment Act is a perverse incentive, and 
mark to market accounting was a self-inflicted wound, a hideous self-
inflicted wound on this country.
  All of those things, put together, none of us are without fault in 
this. But there is no one that laid out the clarity of this in the 
beginning that can look back to the record and say, I got it all right; 
you just wouldn't listen to me. Some did. Some got parts of it right 
and we've talked to some them of them tonight.
  Mr. Speaker, I would be very happy to yield to the gentleman from 
Texas, my friend, Mr. Gohmert, East Texas I might say, and an 
``Aggie.''
  Mr. GOHMERT. I appreciate my friend from Iowa yielding, and I 
appreciate his discussions here on the floor tonight.
  And if I may seek indulgence in the last 5 minutes, I'm hoping to pay 
tribute to one of my constituents that won a--not won, but earned a 
Silver Star, if I might be allowed to do that at the end of the hour.
  But what had concerned me, you know, we all have these meetings and 
hearings and it goes on all day long and often, around 11, 12, 
midnight, I sit down and I can catch up on some news. I can catch up on 
replays, sometimes

[[Page 9799]]

on C-SPAN. But anyway, C-SPAN does help because, you know, we can see 
things from our office that we weren't able to get to the floor because 
of other things going on.
  But I had seen on C-SPAN debate with the chairman with whom my friend 
from Iowa was engaging earlier, and I had seen him engaging with my 
friend from Texas, Mr. Culberson.

                              {time}  2230

  And I became very disturbed. As we know, there are rules of decorum 
here on the floor that we're not to insult another Member of Congress, 
that we're not to insult a Senator or the President, and so I became 
intrigued and very concerned as I heard Chairman Frank making 
statements. I've gotten the Record since then. The comment was made 
about my friend Mr. Culberson by Chairman Barney Frank.
  ``I've never seen people, Mr. Chairman, so attached to something they 
hate. This is presumably a psychological disorder which I'm not 
equipped to diagnose.''
  Well, that caught my attention. He's accusing Mr. Culberson of having 
a psychological disorder, and so it seemed--well, in Shakespearean 
words, ``Me thinks he doth protest too much.'' So I began to listen 
more. He went on and continued speaking, and this is a quote from 
Chairman Barney Frank.
  ``Speaking about being undone, my Republican colleagues are being 
undone by the loss of their whipping boy.''
  So I'm wondering this is a gentleman who is getting very sensitive 
and who is lashing out with what seemed to be inappropriate, perhaps 
not skirting over the rule, but there were other comments that 
certainly seemed inappropriate and unnecessary.
  Chairman Barney Frank said, ``The bill under consideration is 5\1/2\ 
pages. I believe even the gentleman from Texas could have read it by 
now, and if the gentleman from Texas had not been able to read this 
5\1/2\-page bill, I will talk long. Even if you read it slow, you'll 
get it done.''
  He went on and said, ``My colleagues on the other side are kind of 
like kids who have a toy bear or a blanket, and this security blanket 
means a lot to them. Their security blanket is being able to complain 
about something that happened before the break. This bill undoes what 
happened before the break and makes it a nullity. They at some point, 
Mr. Chairman, have to outgrow the security blanket.''
  So he's calling people on this side of the aisle little children. Of 
course the debate that was going on was the concern from our side that, 
first of all, we had been promised by our new President and by the 
Speaker, and we'd even passed a bill in here that said we had to have 
48 hours to review any bill that they rushed in here to the floor. We 
had to have that chance. Yet they came in and immediately filed a bill. 
I think it went up on the Internet at around 11:00 or 12:00, and at 
9:00 or 10:00 the next morning, we were having a debate on it and a 
vote on it that day. There was no 24 hours, but we were told we had to 
do that. It was critical. It was a crisis. People were losing their 
jobs every minute that we didn't vote on it and pass it.
  So they ran roughshod. They would not allow any Member of this body 
the time to read the bill. They ran roughshod over everybody. Nobody 
had a chance to read it. Then to come in and accuse people on this side 
of the aisle, who were concerned about that, of being kids wanting a 
security blanket, I'll tell you: It is a security blanket to me that we 
could be able to read bills before we cram them down the throats of 
Americans. So I'm hearing this on C-SPAN.
  Here is another comment by Chairman Frank: ``The gentleman from Texas 
has now had a chance to read the bill, and has a question for me about 
this bill.''
  He goes on and says, ``He can have all the Special Orders he wants in 
order to beat that dead horse, because it is a dead horse. This bill 
that he does not want to debate the merits of, that he is probably 
prepared to vote against--that he didn't want to debate the merits of? 
That was uncalled for and was inappropriate. We were entirely prepared 
to try to debate the merits, but here again, it had to do with seeing a 
bill rushed through here without a chance for anybody to read it and 
then rushing in last week and saying, ``Here. Let's quickly vote on a 
90 percent tax after the fact, ex post facto, a bill of attainder in 
all likelihood, due process issues, taking issues, equal protection 
issues, all kinds of questions about it.
  Rush that in as a fix. Then here they come, rushing right back in, 
saying, ``Well, we've got another fix. This will even be better,'' and 
we wonder why people would want to question it. Well, you know, is this 
5\1/2\-page bill any better than the one you rushed through last week? 
There were concerns.
  Chairman Frank also went on and said, ``Apparently, there are two 
alternative strategies that the minority has in discussing this bill: 
One, discuss a bill that was passed 6 weeks ago; two, ignore the rules 
of the House and just talk whenever they feel like it. Neither one 
seems, to me, to advance debate.''
  So I'm hearing these things coming from Chairman Frank. There was 
something amiss here.
  He went on to also say, ``This is a revolt against King George, in 
effect, and it is--King George Bush.'' That is really unnecessary, 
slamming the former President. Talk about a whipping boy. They made 
former President Bush quite the whipping boy at every chance. They 
still are.
  I mean, the Constitution makes very clear that Congress is the one 
that has to appropriate money and pass spending bills. After the 
Democrats took the majority in 2007 and 2008 and passed these enormous 
spending bills, which only Congress can do, they still want to blame 
the President who had no power to legislate.
  Chairman Frank also went on and said, ``I wish I didn't have to 
listen to some of these speeches, particularly the repetitive ones 
about the bill 6 weeks ago.''
  He also said, ``But when Members complain about something that might 
happen that won't happen, it is because they are against what is 
happening but don't have the confidence that, if they said it, people 
would believe it.'' This was also a slam at the motives of the people 
who had proper concerns about the rush repeatedly to pass something so 
it looked to people across America that something was being done.
  As a former judge, when I hear people being that sensitive and 
lashing out at others, there is something here, so I had gone back and 
had pulled some quotes to see if, perhaps, this was the source of the 
sensitivity.
  On September 25, 2003, at the hearing on H.R. 2575, The Secondary 
Mortgage Market Enterprises, Mr. Frank said, ``There are people in the 
country who are prepared to lend money to Fannie Mae and Freddie Mac at 
less interest rates than they might get elsewhere. I thank those people 
for doing that. I must tell them that I hope they are not doing that on 
the assumption that, if things go bad, I or my colleagues will bail 
them out. We will not.''
  Also on page 4, ``I think it is clear that Fannie Mae and Freddie Mac 
are sufficiently secure, so they are in no great danger.''
  Also on page 4, this again is Mr. Frank. ``I don't think we face a 
crisis; I don't think that we have an impending disaster. We have a 
chance to improve regulation of two entities that I think are, on the 
whole, working well.'' Well, we know now they were not at all.
  In debate on the floor here on H.R. 1461, to reform regulation of 
Fannie and Freddie, October 26 of 2005--this is in the Congressional 
Record--Mr. Frank said, ``There are banks who complain that because 
Fannie and Freddie are perceived to have some backup from Congress--and 
let me say right now, if you are listening, if you are buying Fannie's 
or Freddie's paper because you think I am going to vote to bail you 
out, sell it and cash it in. I am not going to do that. I do not think 
there is a Federal guarantee.'' We know, apparently, he didn't mean 
what he said or he has changed his mind since then.
  On July 19 of 2008--and this is Air America's 7 Days quoting Chairman 
Frank--``It's really been a test of regulation . . . a conscious 
decision

[[Page 9800]]

brought by Alan Greenspan, who is the arch de-regulator. Because in 
1994, not coincidentally, the last time the Democrats had a 
congressional majority before this year, a bill was passed that was 
called the Homeowner Equity Protection Act, that said to the Federal 
Reserve, `Look, we now have loans being made by non-regulated entities, 
so please pass some rules. We give you the statutory authority to pass 
the rules to contain their activity and make it more responsible.' Alan 
Greenspan said, `Oh, no. That's interfering with the market. I can't do 
that.' He didn't do it; that's where the crisis came.'' Interesting 
place to blame.
  In any event, on September 10 of 2003, there is one other quote from 
Mr. Frank. ``The more people, in my judgment, who exaggerate a threat 
of safety and soundness, the more people conjure up the possibility of 
serious financial losses to the Treasury''--and these are Mr. Frank's 
words--``which I do not see. I think we see entities that are 
fundamentally sound financially and withstand some of the disaster 
scenarios.'' That was from The Wall Street Journal on October 2, 2008, 
bringing back that quote from 2003.
  So, as I look back--and I was looking for the justification of why 
such an intellectual man as Mr. Frank would be lashing out, calling 
names, accusing people here on the floor of having psychological 
disorders--I began to get a picture, and it may have to do with what 
the gentleman from Iowa pointed out earlier about who ends up 
squealing. There was something there that did trigger, perhaps, more 
sensitivity than we might have thought necessary, but when you get to 
the bottom of it, there are quotes here that are a problem, that did 
help protect Fannie when they should have had some things done to shore 
them up and should have had a protection that prevented that from 
happening.
  So I appreciate the gentleman yielding.
  Again, I go back. There was no need to lash out at Mr. Culberson and 
at others, but the more you look back at the quotes over the last 5 
years, even into the nineties, you begin to see, maybe, why there is 
such sensitivity on these issues.
  I appreciate my friend yielding. I yield back to him.
  Mr. KING of Iowa. Reclaiming my time, I thank the gentleman from 
Texas for that measured response to, I think, the very long response 
that was delivered by the chairman of the Financial Services Committee.
  Mr. Speaker, I sat here for an hour and took notes on that because I 
thought it was important that I listen carefully to that presentation, 
as unusual as it is to have the Chair of the Financial Services 
Committee come and ask for a late hour after the adjournment, after the 
break for Easter recess, when most of the Members have gone and have 
caught flights for home. To have the chairman of the Financial Services 
Committee come to the floor and ask for an hour to be able to make his 
case to the American people after a budget is passed, after we've had 
this intensive 2 days of debate on the finances of this country, I 
think, is relatively unusual.
  In my pages of notes that I took during that 55- or 60-minute period 
of time, as I scanned those notes after the fact. There seems, to me, 
to be a lot of things in these notes that are somewhat repetitive, and 
there are not a lot of significant points that can be raised out to be 
rebutted. The subject boils down to this, Mr. Speaker, and that is:
  Who was in favor of the regulation of our financial industry and who 
was not? Who is on record as opposing the capitalization and regulation 
of Fannie Mae and Freddie Mac? Who is on record of supporting the 
Community Reinvestment Act? Who is on record as advocating the 
irresponsible financial activities here in this country? Who seems to 
be, I think, unusually defensive about his position and consistently 
making the charge that Republicans have a fear of regulation?
  Here is another one: ``the fear of the right wing that regulation is 
coming.'' Another statement would be: ``It was a lack of regulation 
that did it.''
  There is an emphasis on fear of regulation when we have Members who 
have consistently supported wise and smart fundamental regulation. In 
fact, we want to see businesses that are able to operate, function, 
profit, and thrive within the tax and regulatory environment that we 
give them.
  By the same token, Mr. Speaker, we're opposed to the idea that we 
should leave holes there that will be perverse incentives that would 
allow Fannie and Freddie to collapse and to put that entire liability 
on the backs of the American taxpayers--yes, maybe $100 billion for 
each of those entities, Fannie and Freddie, but $5.5 trillion of 
potential liability wrapped up in those two. Now it's a wholly-owned 
subsidiary of the Federal Government. Fannie and Freddie are 
nationalized, and that's a fact, Mr. Speaker, and they're nationalized 
because we didn't have the right kind of regulations which I supported 
and voted for on this floor and that others, who seemed to be very 
defensive, opposed directly. It's a matter of the Congressional Record. 
It's a matter of the quotes that have been delivered by Mr. Gohmert of 
Texas and those that I've pulled out of my memory in the dialogue with 
the chairman. That's just Fannie Mae and Freddie Mac.
  If you go down through the rest of the list of these flaws that we 
have in our financial structure, where were these clairvoyant gurus in 
2007 when mark-to-market accounting slid through without objection? 
It's something that didn't show up on very many radar screens. It's 
something that remains a foundation to the hideously self-inflicted 
wound that we have in our economy.

                              {time}  2245

  That's the regulation of mark-to-market accounting. Additionally, the 
AIG, which I spoke of, AIG sitting there as a large insurance company, 
essentially a bonding company that laid out the premiums to guarantee 
bundles of mortgage-backed securities in their performance not based 
upon the value of the real estate that was the collateral that 
underlined those bundles of mortgages but based upon what their 
judgment was of the performance, the anticipated performance of these 
bundles of mortgage-backed securities. Based upon speculation but not 
oversight over the shoulder of AIG.
  Another perverse incentive which was that AIG executives, the people 
who were actually the executives and the front-line people who were 
marketing these insurance policies that ensured the bundles of 
mortgage-backed securities were getting their commission out up front, 
Mr. Speaker. And so once they cashed their check, they didn't have any 
responsibility any longer or they didn't have any accountability to 
what would be the result of whether those loans were performed on or 
whether they were not.
  I would be happy to yield to the gentleman from Texas.
  Mr. GOHMERT. I appreciate my friend from Iowa yielding.
  I have run across some quotes.
  I was at the home of some friends of mine in Dallas, and they had a 
number of fantastic quotes from our history, and I think what we've 
seen today as this budget, this terrible, terrible budget was passed, 
just one of the quotes from Thomas Jefferson, this brilliant man, was, 
``the natural progress of things is for liberty to yield and government 
to gain ground.'' And that's exactly what we saw today with this 
budget. Liberty was yielding, the government taking more and more 
control of everything. Thomas Jefferson knew it.
  I mean, it's like Solomon said, There is nothing new under the sun. 
These things that people think are new and innovative, it is not new. 
It failed in the New Testament church, it failed the Pilgrims when half 
of them nearly starved the first winter. They came up with this grand 
idea, let's give everybody their own private property and make them 
responsible for producing on their own property--and they have access. 
It's theirs. They can borrow it, sell it, whatever. It's theirs. It was 
a great idea. And that carried over 150 years into the Constitution, 
this idea of private property and the government not trying to run 
everything.

[[Page 9801]]

  But what I would humbly submit, the way it appears to me and why 
we're seeing so much government intervention, the more it does, the 
more it feels like it has to do.
  But what we've seen like Madoff, things like Countrywide, some of the 
people there who shoved people into mortgages they couldn't afford, 
packaged them together and then sold them off without recourse, made 
their millions. You know, things like that, those are the things this 
Nation, this government of this Nation, are supposed to be looking for. 
We're supposed to make sure there is a level playing field. We're 
supposed to protect this Nation against all enemies, foreign and 
domestic. We had some domestic enemies that were hurting people in this 
country.
  But what happens is when we get so caught up in trying to run 
everything, telling Detroit exactly what kinds of cars you have got to 
make, telling the business people this is what you have got to do, 
we're so busy telling people how to run their lives, how to run their 
businesses, that we lost what we are supposed to be doing. We're 
supposed to provide these people with a defense from the crooks from 
the domestic and foreign enemies. But oh, no. We're too busy telling 
them what they are supposed to do.
  I love what Abe Lincoln said. He said, ``We have been the recipients 
of the choicest bounties of heaven. We have grown in numbers, wealth 
and power as no other Nation.'' He concluded, ``though but we have 
forgotten God. Because if you know that there is an ultimate Universal 
source of right and wrong, then you care more about doing right and 
trying to help others do right.'' And that's what this government is 
supposed to be doing. We're supposed to be catching cheaters, dishonest 
people hurting America, and we lose that grip when we try to run 
everything.
  And I would also point out as you try to get your hands around this 
huge budget that increases the deficit--I mean, people--we got beat up 
in 2005 and 2006. My first years here, we were in the majority. We were 
beat up because we were spending too much money, and we were. But then 
turn around to 2007 and 2008, the Democrats have control of everything. 
They are not reigning in spending. It goes through the roof. And now 
it's gone even further.
  So if you want to know the bottom-line secret of what this budget is 
about, I would submit to you it can be found in one action: that was in 
this administration sending Secretary of State Clinton to China to beg 
them to loan us more money. That's what this budget does. It makes us 
beg China for more money.
  Mr. KING of Iowa. I very much thank the gentleman from Texas.
  I am starting my seventh year here, and I have watched some sea 
changes politically. I have watched some things shift. I have watched 
the majority change. I have watched the Presidency change, and I have 
watched the majority change in the United States Senate. I don't think 
that I have worked within every possible configuration out of those 
three entities but a number of different ones.
  And one of the things that I have observed is that the voice that I 
heard from the Democrats consistently over those first 4 years that I 
was here, and then to some degree over the next two, was especially, 
especially from the Blue Dogs, Mr. Speaker, that came to this floor and 
said, We've got to have PAYGO, pay-as-you-go accounting. We've got to 
have a balanced budget every year. We have to have a fiscally 
responsible government. And I would make the argument that they would 
want to tighten down the spending, that we were spending too much 
money. They always wanted to spend a little more money than we wanted 
to spend, but they thought we were spending too much in relation to the 
tax revenue that was coming in.
  So their idea was hold down the Democrat spending idea and increase 
the taxes a little bit and get this thing to a pay-as-you-go equation. 
That's the mantra of the Blue Dogs. And we've gone through a long 
debate on this budget, Mr. Speaker, and it has been two intense days 
that this comes down to, but this debate has gone on several weeks now.
  What I have noticed is the absence of the Blue Dogs. Where are they? 
Where is that voice of ``we must balance the budget''? Where is PAYGO? 
What has happened to the people that were the strongest advocates for 
fiscal responsibility among the Democrats? I heard the debate. I was 
impugned by your debate over these last 6 years. But where are you now?
  Puts me in mind of Punxsutawney Phil. When he comes out of the hole 
up there in Pennsylvania, Punxsutawney, Pennsylvania, and the groundhog 
sees his shadow, he gets scared and goes back in the hole again for 6 
more weeks of winter. I don't know that that's necessarily the case, 
but I think the Blue Dogs have become the groundhogs of politics. They 
have gone down in the hole, and they are going to stay in there until 
there is a little bit more favorable climate that comes out, maybe not 
quite so much bright light shining, not quite so much shadows that are 
cast by President Obama, Nancy Pelosi, Harry Reid, this troika that 
drives this irresponsible spending bill. But they feel compelled to 
support the President. But he's our President, too.
  But I don't support an irresponsible budget, Mr. Speaker, and I would 
have been really regretful to come to this floor to see a President of 
the United States of my party that had offered the kind of spending 
that would double our debt in 5 years and triple it in 10 years. The 
kind of spending that grows this irresponsible socialization of 
America--we rejected for a long time the European socialization--the 
socialized economy of the Europeans, and now we have--the President's 
over in Europe and is being lobbied by the Germans and the French. They 
are saying, Get a grip, Mr. President. Don't be spending money so 
irresponsibly. The Germans are saying, Get a handle on this thing. We 
don't agree with you in this Keynesian, almost intoxicated Keynesian 
approach to spending. This is Keynesian.
  And the President said to us on a day in early February that--well, 
he said to America that spending is stimulus. And then he said that 
FDR's New Deal actually would have worked except FDR essentially lost 
his nerve and was concerned about spending too much money. And so what 
you had was, according to the President, was a recession within a 
depression. And if you look at the records, there was a little dip in 
the economy in the late 1930s, but he argued that along came the 
biggest stimulus plan ever, which was World War II, which brought us 
out of the Great Depression.
  Mr. Speaker, I will argue that the New Deal wasn't a good deal. No 
amount of more government spending, more profligate spending was going 
to get us out of the Great Depression. If you look at the data, there 
is no Keynesian approach in free market history that you can 
demonstrate that prevailed or produced a positive result.
  In fact, if you look at the New Deal in the 1930s, that Keynesian 
spending, which I think intoxicated FDR for the first half of that 
decade, doesn't show that the economy grew. It shows that it was flat 
and then it declined.
  And if you look at the wild Keynesian spending that took place in 
Japan when they had their economic recession in the 1990s, the more 
money they spent, the deeper they went into debt and the less they had 
to show for it. That's odd. That's what Henry Morgenthau said back in 
the 1930s as well, Mr. Speaker.
  So when you look at that data--and if the people on this side of the 
aisle and the people that are running this show out of the White House 
can't point to an economic time in history that their model, which is 
the New Deal, they can't point to a time in history when it works, the 
data is not there. It does not exist, Mr. Speaker. And yet the 
President was only critical of FDR to the extent that he lost his nerve 
and he should have spent more money in the 1930s.
  Well, I can tell you this President has not lost his nerve. He is 
spending money hand-over-fist in a fashion that is unparalleled in 
American history

[[Page 9802]]

and maybe unconceived by any world leader in American history. And the 
price that we are paying for this--we've said over and over again--goes 
into the next generations. And the best you can hope for with a New 
Deal, a new New Deal--because we had an old New Deal that was a failed 
New Deal--the best you can hope for with an uber new New Deal of 
President Obama's is it may diminish the depths to which we might 
otherwise decline.
  But the price for it's a very, very long delayed recovery, Mr. 
Speaker. That's what we're faced with today.
  This budget that's crossed the path of the floor of this House is an 
irresponsible budget. It's a budget that spends way beyond our means. 
It's a budget that doubles our deficit in 5 years and triples it in 10. 
It's a budget that's irresponsible. It's one that doesn't even meet the 
needs of the United States of America, and it's one that I don't want 
to see my children saddled with.
  And I can tell you, it's one that my children--or now men--call me 
and send me e-mails on an almost daily basis and are saying, What are 
you letting happen to me? What is happening to me? And they are going 
to be paying the price. My grandchildren will be paying the price. And 
I fear, Mr. Speaker, that my great grandchildren, should I be blessed 
with any, will be paying the price.
  The gentleman from Texas has a point to make before we adjourn. I 
will be happy to yield.
  Mr. GOHMERT. You know, many in this body think this Nation will go on 
forever. We know no nation will last forever. We are endowed by our 
Creator with certain inalienable rights. But those rights are like any 
inheritance. You only get to have them if people are willing to fight 
and protect them, fighting government and then fight our enemies 
abroad.
  Well, in the summer of 2008, media from around the country released 
reports on an attack on an American military outpost base in the Kunar 
province of Afghanistan near the Pakistani border. Accounts say that 45 
U.S. paratroopers and 25 Afghan soldiers were assaulted by up to 500 
Taliban and al Qaeda fighters, bombarding our soldiers with rocket-
propelled grenades and mortars. Nine U.S. soldiers were killed, 15 
injured, and it was called the deadliest attack on American forces in 
Afghanistan since 2005.
  I am here today to honor these servicemembers for their incredible 
sacrifice and to especially recognize one in particular who I am so 
very proud and humbled to represent as his U.S. Congressman.

                              {time}  2300

  Army Specialist Aaron David Davis, from Kilgore, Texas, was serving 
as an anti-armor gunner of the 173rd Airborne Brigade Combat Team and 
was sent in as reinforcement when insurgents assailed our soldiers on 
July 13, 2008.
  In the rural town of Wanat, Afghanistan, Specialist Davis and his men 
were bombarded by enemy fire from all sides as insurgents took over 
homes and mosques in their attempts to seize the newly established 
American base there. Specialist Davis and his fellow soldiers were 
vastly outnumbered, but they continued to courageously fight. 
Specialist Davis saw many of his fellow soldiers killed in the midst of 
that chaotic combat and was wounded himself; yet he was not deterred 
from fiercely protecting the base and his friends.
  An American military helicopter finally came to the rescue, but even 
after he was told to get on the helicopter that would surely be his 
ticket to safety, a wounded and hurting Davis was more concerned with 
the protection of others. With his own life in peril, he stayed and 
continued to fight.
  Among his heroic actions, Specialist Davis crawled to the frontline 
to check on a fellow soldier, and then he helped save three fellow 
soldiers, putting them on gurneys and helping get them airlifted out of 
the ongoing battle. While fighting to protect these men, Davis was 
again wounded, receiving shrapnel in his left hand, left arm, and 
behind his right eye. He became so wounded he finally had to be lifted 
away from the fight himself.
  There is so much more to the story, and I wish there were more time 
to elaborate on this young man's incredible selflessness. Aaron Davis 
spend many weeks recovering from his wounds at Walter Reed Army Medical 
Center, and he is now back on active duty at Fort Sam Houston, 
continuing to boldly serve his country while still further 
rehabilitating.
  He was recently awarded the Purple Heart for the wounds he suffered, 
as well as the Silver Star, the third highest military decoration that 
can be awarded to a member of any branch of the United States Armed 
Forces, for his incredible courage and unwavering commitment to his 
country and his fellow soldiers. Specialist Aaron Davis deserves our 
thanks for his bold bravery and selfless sacrifice.
  It is the courage and commitment of Aaron Davis and his fellow 
soldiers and those like them that allows us to continue to enjoy our 
freedom as U.S. citizens. We are manifestly proud and permanently 
grateful. To Specialist Aaron Davis, may God bless Aaron Davis and he 
and all he has done for this Nation.
  Mr. KING of Iowa. I will let that be the concluding word this 
evening.

                          ____________________