Federal Housing Finance Reform Act of 2007
Floor Speech
FEDERAL HOUSING FINANCE REFORM ACT OF 2007 -- (House of Representatives - May 17, 2007)
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Mr. FRANK of Massachusetts. Mr. Chairman, I fully agree with my friend from North Carolina.
I rise only on one specific factual point. The gentleman from North Carolina said this would levy 1.2 basis points on the mortgages. That's in lieu of a profit. The Treasury asked us to change it.
The gentleman from North Carolina said 1.2 basis points. That's equivalent to a 1.2 percent tax. No, that's 100 times wrong. A basis point is one one-hundredth of 1 percent. So 1.2 basis points is not 1.2 percent as the gentleman said, but .012 percent.
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Mr. FRANK of Massachusetts. Mr. Chairman, I rise to oppose the amendment.
Sometimes I am more impressed with the gentleman's work product than others. He just made a misstatement of his own amendment, if I have the right amendment. He says, instead of putting it in the Affordable Housing Fund, put it into Social Security.
Nothing in this amendment does that. This amendment says that if there is a deficit in the Federal budget, then you don't put the money from Fannie Mae and Freddie Mac into the Affordable Housing Fund. It does not say you put it anywhere else. It is unrelated. It simply says that if you don't have enough money to meet the deficit, then you don't take money that would not otherwise go to the deficit.
There is no connection between the money being spent from Fannie Mae and Freddie Mac. This one is scored at zero by CBO; so, not spending the Affordable Housing Fund would in no way reduce the deficit.
I would yield to the gentleman if he would show me where in his amendment it says that, if we don't spend on affordable housing, we would put it into reducing the deficit. I am reading the amendment. There is nothing like that in here. I yield to the gentleman.
Mr. ROSKAM. Here's the point.
Mr. FRANK of Massachusetts. No. I am yielding for the purpose of a question. Answer the question. The gentleman said, the choice is to either put it into affordable housing or put it into the deficit. It doesn't go into the deficit now. It is Fannie Mae and Freddie Mac profit. Nothing in his amendment that I read would put it into the deficit.
Would he please explain to me what his statement meant and how it is accurate, and I will yield for that purpose.
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Mr. FRANK of Massachusetts. I understand that. That is a definition of the deficit. Good for the gentleman. But it does not put any money into the deficit. The gentleman said that if we passed his amendment, we would be choosing to put the money, instead of into affordable housing, into helping Social Security. The amendment doesn't say that.
Mr. ROSKAM. Mr. Chairman, will the gentleman yield?
Mr. FRANK of Massachusetts. I will yield if the gentleman will give me an answer to the question. Reading his amendment doesn't get to the question. How does your amendment transfer money into Social Security?
Mr. ROSKAM. Maybe it is a two-step dance.
Mr. FRANK of Massachusetts. No.
Mr. ROSKAM. Will you yield?
Mr. FRANK of Massachusetts. I will yield, it is a two-step dance. Is the gentleman asking me to dance?
Mr. ROSKAM. The first step is to push the pause button, Mr. Chairman, and to recognize the current obligation--
Mr. FRANK of Massachusetts. I take back my time. The gentleman has now acknowledged that his statement was not accurate. The gentleman has now acknowledged that nothing in his amendment does anything about the deficit. He says it is a two-step dance. It is a Kabuki dance. It is a Dance of Seven Veils. It has got an unrepresentative argument here.
Nothing in this puts the money into Social Security. There is nothing in here that would do that. What it says is, let's not put any money into affordable housing from Fannie Mae and Freddie Mac if there is a deficit.
Frankly, the gentleman did not, it seems to me, clearly represent his amendment. He says it is a two-step dance. Is he proposing that we would then take the money from Fannie Mae and Freddie Mac, the 1.2 basis points, not 1.2 percent, and put that into the Social Security Trust Fund? He has now acknowledged that nothing in his amendment would help Social Security. I guess we will learn later what is the second step of the dance.
I am kind of older; I used to watch Arthur and Kathryn Murray teach dance, but I don't think even they could have taught us how this is going to spin into putting money into Social Security. So this amendment is a perfect definition of a non sequitur.
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Mr. ROSKAM. I thank the gentleman.
In the same way, Mr. Chairman, you have demonstrated it to the committee, and you have been a leader in this dance, basically, by saying, ``Trust me in how we are going to fund this.''
Mr. FRANK of Massachusetts. I take back my time. That is absolutely untrue. I have never asked people to trust me. If he is talking about spending affordable housing later, what I have said is it will be spent in accordance with a bill to be passed by the Congress. That is not trusting me.
And I have never said that one thing was going to accomplish the other. We have said we would set some money aside and later decide how to spend it. It doesn't do that here. It leaves the money with Fannie Mae and Freddie Mac. This isn't public money. It is a non sequitur. I repeat.
It says we have a deficit in Social Security. That is too bad. Let's keep fighting the war in Iraq for hundreds of billions of dollars, let's keep doing all these other things, but let's not take money from Fannie Mae and Freddie Mac that would not otherwise contribute a penny to Social Security and spend it on affordable housing.
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Mr. FRANK of Massachusetts. Mr. Chairman, I'm disappointed in the gentleman from Illinois, having yielded to him, refused the same courtesy. It's my time, the gentleman from Georgia's time.
I never asked anyone to trust me. He repeats that. It is simply inaccurate.
I've said that I thought we should set some money aside for low income housing, a specific purpose, low income housing, and then in a later bill, not me personally, but the Congress, decide how best to disburse it. That is hardly saying trust me and I'm disappointed. The gentleman generally it seems to me is fairer than that.
Secondly, he says higher priority. Again, this is fantasyland. Nothing in his amendment does a penny for Social Security. And he says temporarily suspend. Hit the pause button until the deficit is over.
Let's be very straightforward. That means kill it forever. There's no pause here. No one is assuming that the deficit is going to be ended within the next 7 or 8 years, so the argument that the gentleman makes that it is more important to do Social Security trust fund than the housing fund is irrelevant because nothing, nothing in the gentleman's amendment puts a penny into the Social Security. It's one more way to kill the affordable housing fund reflecting an ideological opposition to the existence of the Federal Government helping build affordable housing.
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Mr. FRANK of Massachusetts. I thank the gentleman. Will he explain to me what in the world that has to do with an amendment that does not provide a penny for Social Security?
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Mr. FRANK of Massachusetts. Mr. Chairman, that, I must say, totally disappoints me. For the third time the gentleman has tried to put words in my mouth. The words ``trust in me,'' the gentleman read that, and the gentleman's distortion, systematic distortion, has gone beyond what I can deal with in a brief intervention. But I will say this: I continually said we should address that in separate legislation. If the gentleman doesn't know the difference between passing legislation which sets guidelines and saying ``trust me,'' then the gentleman understands less in this place than I had hoped he did.
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Mr. FRANK of Massachusetts. Mr. Chairman, the gentleman from Illinois apparently misremembered something. He looked diligently to try to find what he said, and he couldn't find what he imputed to me. I never said ``trust in me.'' I didn't imply it. His subtext notion makes as little sense as his argument that we are going to somehow help Social Security in an amendment that doesn't touch Social Security.
What I said repeatedly was I want to reserve this now because I think this bill will not be vetoed and we will get the reservation, and for budgetary purposes, CBO scoring, it is a better way to do it, and we will then pass a separate piece of legislation. And his equation of my calling for a separate piece of legislation with my saying ``trust in me'' falls below the level that I had thought we would debate here.
I would again repeat, the gentleman from Alabama eloquently said let's start now. Let's do this. I want to be very clear, Mr. Chairman. I have never stopped him. The gentleman from Alabama had a new-found passion to help Social Security. Where is his amendment doing that? Where is his legislation doing that? This notion of let's get to Social Security, the central point is: The gentleman from Illinois' amendment does not put one penny into Social Security. Passing it would not help it. It would kill this fund forever.
What we have had is a variety of amendments. This is the fifth one tonight that finds a different way to kill affordable housing. The gentleman from Alabama was straightforward. He said he just wanted to kill it. So this has nothing to do with Social Security. It has to do with killing the Affordable Housing Trust Fund.
And I would just add this, and I thank the gentleman from Colorado for yielding, I find it somewhat ironic that Members who continue to support spending hundreds of billions of dollars on that terrible war in Iraq, which does America more harm than good, lecture me because we are going to spend half a billion dollars a year on Affordable Housing Fund out of nontax funds. Yes, let's do something about Social Security. Let's do something about the war in Iraq. Let's do something about other wasteful programs. But to take $500 million, I didn't see this concern for Social Security when we were doing the defense budget. I didn't see it when we did the authorization earlier today. I didn't see it when we were adding money.
I must be very clear, Mr. Chairman, within the rules, I am unpersuaded that the real motive of Members here is to do anything about Social Security. It is clear if you look at this pattern, they don't like the notion of the Federal Government's helping to build affordable housing, even if we do it, as we have succeeded in finding a way to do it in this bill, in a way that has no impact on the taxpayer, no impact on Social Security, and no negative consequences on the other government programs.
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Mr. FRANK of Massachusetts. Mr. Chairman, I move to strike the last word.
Mr. Chairman, I do not think we are ready to put this into a nationwide operation at this point. It has a great deal to commend it, and the gentleman is right to talk about pilot projects.
In the Committee on Financial Services we have created a task force, headed by the gentleman from Colorado (Mr. Perlmutter), to look at all housing programs to promote energy efficiency. This is something that we should have looked at a while ago. We have been late. There are some various programs. There are some in public housing. We tried to put some into the FHA. The chairman of the Appropriations subcommittee, my colleague from Massachusetts (Mr. Olver), is interested in doing this, along with the gentleman from California in HOPE VI.
What I think would be best would be if we could defer this now and give it some study. There are some implications for how you carry it. There are some fairly specific calculations. It is one thing when you do it in a pilot project; it is another for Fannie and Freddie to do this nationally. And, of course, they don't do it directly. They do it through their various lenders.
So while I think in concept this is something we should be moving towards, I would hope we could do some further work on it. It is our expectation to bring out an overall housing energy promotion bill sometime this fall, and this would be an ideal candidate for inclusion in that.
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Mr. FRANK of Massachusetts. I will yield to the gentleman at the end.
First, let me say to the gentleman from Louisiana, I agree with him in many ways. Yes, they haven't done enough. I do find a great inconsistency, not on the part of the gentleman from Louisiana, who has been completely consistent on this issue for years, but first, we were being told that we should not interfere with the profitability of Fannie Mae and Freddie Mac because we would be driving up the cost for middle-income homeowners. We heard that in several of the arguments in trying to get rid of the Affordable Housing Fund.
Now we have a much more serious attack on the ability of Fannie Mae and Freddie Mac to help middle-income homeowners. This says no more middle-income homeowners, only people below the median. We were told before that if we took $500 million from Fannie Mae and Freddie Mac's profits each year, we would inevitably be driving up the cost for middle-income borrowers. This would reduce Fannie Mae and Freddie Mac's profits by 7, 8, 10 times that amount. They get most of their profit from things held in the portfolio.
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Mr. FRANK of Massachusetts. Regular order, Mr. Chairman. I yielded to the gentleman.
I have said that I do not think it is my intent or anybody else's intent that will override the economics of the situation. I do not think we can legislate that it comes either out of this or out of that. The money is fungible. My view is that in the competitive situation in which they find themselves, much of this will come out of shareholders' profits. Some may come out of the banks and others they deal with.
The point I am making is this: The gentleman and others on the Republican side argue, they were arguing before about a mortgage tax increase. They kept saying we are going to raise the cost of mortgages, not by anything we did directly. Their argument was that when you reduce the profitability of these entities, they will be driven to raise their prices and that will cost other people more.
I believe they are far more constrained in their ability to raise prices. I don't think they are holding prices down now out of love. I think they are getting them up as high as they can now in the competitive situation.
But if you believe that reducing their profits will cause them to increase their prices and thus hurt other people, in this amendment that has a much greater impact of that kind than the housing fund, because this restriction on the portfolio will cause a far greater reduction in the profit than 1.2 basis points. And it again emphasizes to me that what we have are people who don't like the Affordable Housing Fund, because they have had various contradictory ways of trying to get rid of it. Now, the gentleman from Louisiana is correct, they haven't done enough to help low income people.
One of the things we do in this bill is to greatly increase the goals. We impose goals on Fannie Mae and Freddie Mac which also reduce their profitability. We tell them to do more of this kind of thing and we increase the enforcement mechanism for doing it. So we do try to increase the goals in the enforcement mechanism and we create the Affordable Housing Fund.
I would say this: Maybe they shouldn't have created these hybrids in the first place. They are part profit making and part with the public enterprise. It is hard to run them that way, I understand that. That is why many of us decided that we will try to get them in the direction of helping low income people, but given the pull of profit, some of what we should do is to take a piece of the profit and put it directly into affordable housing.
That is why we have a hybrid solution dealing with a hybrid. That is why I hope the amendment is defeated.
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Mr. FRANK of Massachusetts. Mr. Chairman, I thank the gentlewoman, and I will yield to my friend from New Jersey after I have propounded a question.
My position consistently today has been that it is not possible with absolute specificity to say an enterprise is paying for this out of this pot or that pot or the other pot. I do believe most of this will come from the shareholders.
But people on the other side argue no, reducing the profitability by $500 million a year for both enterprises, levying 1.2 basis points on the portfolio, was going to raise the mortgage rates for the middle class. For people who believe that, I want them to explain to me how reducing the portfolio so substantially would not cost even more to the middle class?
Again, Members said taking $500 million in profit, 1.2 basis points on the portfolio, would raise the rates on the middle class. I assume it doesn't do it specifically. It does it by reducing the profitability and inducing them to raise prices.
Since it would reduce profitability by many multiples of the housing fund, why would it not have a much greater effect?
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Mr. FRANK of Massachusetts. Excuse me, I am taking back my time to apologize for apparently not being clear in my question. I wasn't talking about cross-subsidization. Here is the point. I would have thought it was clearer, and I apologize for my inarticulateness.
The argument was that by taking $500 million from profits, 1.2 basis points on the portfolio, we would be reducing profitability and inducing the enterprises to raise prices and therefore that would be a mortgage tax.
The gentleman's amendment would reduce the profitability by far more than $500 million a year. It would be a far greater levy on them than 1.2 basis points. Now, the mechanism by which they claim that the fund is a mortgage tax is that as you reduce their profitability, they are driven to raise prices and that will cost more.
Now, it has nothing to do with cross-subsidy. Why does an amendment which would substantially reduce the profitability not have an even greater effect in terms of the middle class, who would not be benefiting from the portfolio, in raising what they have to pay?
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Mr. FRANK of Massachusetts. I thank the gentlewoman.
That is not what I said. I said reducing the profitability. I would ask the gentlewoman not to yield any further. We are not going to get an answer. I apologize for starting the whole thing.
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Mr. FRANK of Massachusetts. People keep talking about $3 billion for Katrina. There was no housing construction fund in the hurricane bill. If that is meant to be construction, it is simply not the case. We put vouchers into the hurricane bill, but there was not $3 billion in any housing construction in the Katrina bill.
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Mr. FRANK of Massachusetts. I thank the gentleman for yielding.
There has literally been no Member of the House who has been more dedicated to helping those who are in trouble than the gentleman from Texas. He represents a community that is a model community: Houston.
We don't always show neighborliness in reaching out to others. The city of Houston, its mayor, its congressional delegation, its citizens, its police department, has known an extraordinary degree of compassion for fellow human beings in trouble. There are few examples in this country's history of one community reaching out as generously as the people of Houston have to the people who were forced to evacuate the gulf, particularly Louisiana.
The gentlewoman from California and I listened to the gentleman from Texas, and we put some language into the bill that we did last time on the hurricane.
On this one, at this point I would ask the gentleman to withdraw his amendment. We appreciate what has gone on. The destruction was greater in Mississippi and Louisiana. There are still unmet needs in Texas. We appreciate that. We have done something, and I acknowledge we have not done enough.
I promise the gentleman, we will continue to work with him to that end, but we have commitments in terms of the physical reconstruction to go to these two States.
There will be further years in this bill. Texas continues, particularly Houston, to have a big claim on us, and we will continue to try to work with the gentleman to try to resolve it, but we hope not to do it in a kind of zero-sum situation.
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Mr. FRANK of Massachusetts. Mr. Chairman, I move to strike the last word just to acknowledge the graciousness of the gentleman from Texas.
We will continue to work with him. Houston is entitled to more help and it will get it. The only thing, I want to be partially modest. He said I have the least, the last and the lost. I have tried hard tonight to help the least and the last. But in my debates with the other side, I haven't been able to make much of an impression on the lost.
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Mr. FRANK of Massachusetts. Parliamentary inquiry, Mr. Chairman.
The Acting CHAIRMAN. The gentleman may state it.
Mr. FRANK of Massachusetts. The subsequent votes, do I understand correctly, will be 2-minute votes, Mr. Chairman?
The Acting CHAIRMAN. The gentleman is correct. After the first vote, subsequent votes will be 2-minute votes.
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Mr. FRANK of Massachusetts. Mr. Chairman, I move to strike the last word.
Mr. Chairman, the author of the amendment clearly indicates he would like to kill the housing fund altogether. He voted to do that in several ways. We had several votes to do that. We're going to have about 10 votes on the same issue on this bill. I don't know, there's seven different ways to kill your lover. We have about 11 different ways to try to kill the affordable housing fund. Some of them contradict each other because they are joined only by the common opposition to the Federal Government constructing affordable housing. This bill continues that, this amendment, because the key change it makes is to strike the provision that says it will be used for the construction of affordable rental housing and says only vouchers. Now, the vouchers are useful as part of a balanced program. But the vouchers now have been, under the Republicans policy, annual vouchers. We haven't been able to change that yet. Maybe we will.
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Mr. FRANK of Massachusetts. I will be glad to read to the gentleman his amendment, or at least the one that I have. Is this No. 16?
Mr. FEENEY. It's a modification. With the permission of the chairman and unanimous consent, we have a modification.
Mr. FRANK of Massachusetts. When did we get unanimous consent to modify? I don't remember hearing that request. Parliamentary inquiry.
The Acting CHAIRMAN. The Chair wishes to make clear the amendment has not yet been modified.
Mr. FRANK of Massachusetts. Well, I will then take back my time. The gentleman chides me apparently for telling the truth. I have the amendment as printed. I am reading the amendment. He says where in it is the voucher program? Here on page 2 on lines 2, 3 and 4. And it's not very arcane. Let me read it. Affordable housing fund grant amounts of a grantee for any year after 2007 shall be eligible for use or for commitment for use only for rental housing voucher assistance in accordance with paragraph 19.
Now, I apologize to the gentleman for reading his amendment. I had previously to apologize to the gentleman from Illinois for reading his amendment. The gentleman corrected me incorrectly. I would like to go on and correct his incorrect correction before I again yield. The gentleman's purpose may be confusing to people, but I just want to be clear.
Mr. FEENEY. Mr. Chairman, may I make a parliamentary inquiry?
Mr. FRANK of Massachusetts. I do not yield for the purposes of a parliamentary inquiry. Parliamentary inquiries are only done after the holder of the floor yields. And the fact is that I do want to make it clear I am reading the gentleman's amendment. It says only for vouchers, and that's why I said that. Now I will be glad to yield to him.
Mr. FEENEY. Well, thank you. And when the gentleman had yielded previously, I had made a motion for unanimous consent to use the modified amendment which does not refer to the voucher program. And so I had made that motion and had not got a ruling.
Mr. FRANK of Massachusetts. I object.
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Mr. FRANK of Massachusetts. I take back my time. I've yielded to the gentleman for varying explanations of his varying amendments. But I want to talk about the one we have. First of all, I do not give consent because we had a pre-filing deadline precisely so that we can study these things. They are somewhat complicated. I think having them come right off the top of people's heads, particularly at 10 o'clock at night, after we've debated the same issue about seven times, it's not a good idea to come up with something brand new.
Here's the amendment. It says only vouchers, and it says it in several places, that it's for vouchers. And here's the problem with vouchers. He says it's still better than constructing housing. No, it is not, because a voucher program helps you compete for existing rental housing. But an annual voucher program, which is referenced in this bill, in this amendment, does not give you the ability to build new housing.
In parts of this country there is a housing shortage, that's a problem. In the gulf it's a problem because the housing was destroyed. So when you only do vouchers and do not help build affordable housing, you run into that problem.
Now, under our proposal, communities would have the ability to make choices. But what the gentleman says is in parts of the country where there is already a shortage of physical affordable housing, all his amendment would do would be to drive up the price by increasing the demand for it without in any way adding to the supply.
Now the gentleman's apparently acknowledged the flaws in the amendment by trying to modify it after he had previously submitted it. I don't believe this kind of last minute changes ought to be made at this point. And so we are left with the flawed amendment.
I understand the gentleman's desire to kind of disown it. But the fact is, it is what it is. And a voucher-only program does not add to affordable housing supply and that's what we need.
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Mr. FRANK of Massachusetts. Yes, it is. And here's the point. And if the gentleman would yield to me. I do not think, and it says, disabled homeless veterans. I would agree between now and when we get to conference to give a first preference to disabled homeless veterans. I have two problems with this amendment. First of all, it is not clear that there are that many disabled homeless veterans to absorb 800 million a year. If there are you could deal with it.
But secondly, I do not think in many parts of the country, including my own, that if you only did vouchers you would be doing enough for them. I'd like to build some housing, some with supportive services. But I will give the gentleman my commitment that in the final bill we should be giving a very high preference to disabled homeless veterans.
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Mr. FRANK of Massachusetts. And the localities will have the ability to do it by voucher or by construction, including, as the gentleman well understands from his work, maybe places that have supportive housing as part of it. That would be an eligible use.
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Mr. FRANK of Massachusetts. Mr. Chairman, I move to strike the last word.
I also want to strike a few misconceptions. First, the gentleman quite inaccurately said that the money here is authorized with no direction about how it is spent. The only money that will be spent if the bill becomes law, unless there is further action by the Congress of the United States, is the money that will go to Mississippi and Alabama, and the bill is quite clear that that will go to the States of Mississippi and Alabama. No further expenditures will be authorized until a second bill goes forward describing how they will be done. So the bill does describe how they will be done for Mississippi and Alabama. And, yes, there will be a second bill that will, we believe, describe how this money will be spent.
Secondly, he said we are reaching down to corporations like Exxon and taking their money. Well, Fannie Mae and Freddie Mac are very different than other corporations. They are federally chartered and have very specific Federal advantages. So, no, there is not an analogy between directing them and, in fact, other corporations, as was recognized, for instance, by Secretary Jackson of HUD as he began to criticize them for not doing enough in their affordable housing goals.
But the more important issue I have to say, Mr. Chairman, is I am somewhat puzzled by the, I don't know if it's a clash of egos or what, the inability of people on the other side to coordinate.
There were four separate amendments that seek to do exactly the same thing. Yes, we agree; people who are in the country illegally should not be the beneficiaries of this program. In fact, we accepted the amendment offered by the gentleman from Arkansas (Mr. Boozman) who says that very clearly. It does say that you can't be here unless you are here legally, and says that the director shall issue requirements calling for sufficient evidence to show that. Now, one difference between that amendment and this one is this one gets people back into the controversy over the REAL ID Act. That was controversial when passed. A number of States, governors and legislatures have expressed disagreement.
Now, we already have accepted into the bill the amendment of the gentleman from Arkansas to deal with the question of keeping out people who are here illegally. Three other amendments, I guess people all want to get credit for the same thing, but one of the things they do is to get into the REAL ID Act.
So Members should understand that in voting for this amendment, you will be going beyond simply keeping people out of this program who are here illegally; we've already accepted an amendment directing that that be done. Instead, you will be getting the privilege of getting back into the controversy of the REAL ID Act. If you come from a State where that's not popular, then you get a chance to vote for it unnecessarily, since we already have the restriction.
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Mr. FRANK of Massachusetts. Mr. Chairman, I will take back my time to say yes, that's true. That is why the gentleman from Arkansas' amendment, which was adopted, sets forward the requirements.
This does mention the REAL ID Act. It is an affirmation of the REAL ID Act. It doesn't say it's the only way. But Members should understand, in adding this to what we have already accepted from the gentleman from Arkansas, what Members will be doing will be getting a chance to, once again, tell their State they may have a problem. Yes, we like the REAL ID Act and you've got to stick with the REAL ID Act. I don't understand why Members would want to reintroduce that controversy when we already have accepted an amendment that says there shall not be anybody in here who is not here legally. And it says, ``Regulations, as the director shall issue, setting forth requirements for sufficient evidence that they are lawfully present in the United States.''
So we have an amendment that has been accepted that will be part of the bill if it becomes law that says you must, according to the director, be able to show, the gentleman said there are various ways to do it. Now, this bill gets more specific and it gives some examples, including, they said, the REAL ID Act. And I don't think all the Members are eager once again to take a position about the REAL ID Act in the face of a lot of opposition from governors and legislatures when exactly the same purpose has been identified here.
You know, people used a cliche before, everybody's entitled to his own opinion, but everybody's not entitled to his own facts. But I guess on the Republican side, the rule is everybody is entitled to his own amendment on a popular issue, because we have four identically on this. We had 11 on the fund. We have six on something else.
Now, far be it from me to try to get them to coordinate, but we're going to be here for a couple more hours mostly debating amendments that were offered by people on the same subject of a previous amendment, some of which were offered because somebody didn't get the credit for it. So maybe this isn't the REAL ID Act, it's the ``Real-Credit-For-Me Act.'' And we already have in the bill, as I said, an amendment that accomplishes this purpose.
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Mr. FRANK of Massachusetts. Yes, I do agree that it should only be--the gentleman didn't mean citizens, because it means citizens or lawful immigrants. Yes, I agree. That is why I supported the amendment from the gentleman from Arkansas.
I would say the other language that the gentleman from Georgia was talking about does not have this direction. It directs the director to require sufficient evidence that they are lawfully present in the United States. Yes, I do think some flexibility is there.
And while the gentleman from Georgia wants to back away from the REAL ID Act, if you vote for his amendment, you are once again reaffirming the REAL ID Act and saying only drivers licenses from those States are good, and it specifically gives very great prominence to the REAL ID Act, as opposed to telling the director, with some flexibility as things change, to accomplish the same goal.
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Mr. FRANK of Massachusetts. No. I did not say that, never have. But I have said that there are a number of links, and everybody except the gentleman from New Mexico, apparently agrees that government-sponsored, enterprises, we do many things to them that we wouldn't do to a purely private corporation. They have a line of credit, they have a supervisory board. There is no OFEHO for private corporations. So, no; we treat them very differently, because they continue to be linked to the government, than other corporations in a variety of ways, including giving them housing goals, having OFEHO set up, giving them a line of credit and doing other things. They are subject to many more restrictions than a purely private corporation.
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Mr. FRANK of Massachusetts. Mr. Chairman, I move of to strike the last word.
I have heard the pejorative ``anti-American'' used in some ludicrous contexts, and I think I have seen now the champion application of that inappropriately.
If you are not for a complicated amendment, adding some language to a disclosure that is somewhat controversial, you are anti-American. I hope the debate bounces up from here.
I would then also say to the gentleman from Georgia, my colleague from Georgia quite correctly pointed out that his amendment would call on people to reaffirm the value of the REAL ID Act. And it is true that the REAL ID Act is only one of four things, but some Americans don't have passports. In fact, the majority of American citizens don't have passports.
A Social Security card with a photo ID issued by the Federal Government, some people don't have that.
And a certificate from the Department of Homeland Security Immigration, if you are a regular American citizen, you don't have that. So of the things people would have of those four, that would be the most common. We don't prescribe it in the amendment adopted by the gentleman from Arkansas. We leave it up to the director because things may change. Things may evolve. There may be new documents. Prescribing this now for 4 and 5 years from now seems to be an error. But it is true, the gentleman from Georgia does give Members a chance to vote once again in favor of the REAL ID Act, as a major, not as an exclusive, but a major premise here.
As to the gentleman from Texas' amendment, I note that he makes a point of saying that the cost of the disclosure will be paid for by the housing fund. He also believes that the housing fund comes at the cost of the mortgage borrowers. I don't understand why with this great flourish he says, hey, we'll make the housing fund pay for this because by his reasoning, that is an additional amount for the mortgage borrowers.
If the existence of the housing fund costs them money, adding to the housing fund simply would add to their costs.
My objection to it is this. It is a complicated, additional calculation of a sum that is de minimus. Even if all of the cost of the housing fund went to individual mortgages, we are talking about a very small, 1.2 basis points of the portfolio. In fact, I believe most of it won't come from the mortgage holder, it will come from the shareholders. It is a complicated calculation. People will differ about how to make it.
So this notion that if it is going to be a real calculation, and if it is just plucked out of the air it is some pro rata thing and it doesn't mean anything, but to impose additional bureaucracy for a cost that is de minimus is a mistake.
That is why my friend from North Carolina said this is part of the ``we don't like the housing trust fund.''
And by the way, when the gentleman said a housing trust fund created by the Democrats, we were being given too much credit; 43 Republicans joined us in voting against the amendment of the gentleman from Alabama to kill the housing trust fund. So it wasn't just Democrats; 43 Republicans is a pretty significant chunk. It was somewhat bipartisan.
But the point is only if you believe the housing trust fund is going to be some significant cost does it make sense to go through all of this trouble to add this line.
We who believe it is will be de minimus in terms of how it affects each mortgagor, think it will probably cost them more to do this calculation and charge them for it than they would otherwise have to pay.
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Mr. FRANK of Massachusetts. Reclaiming my time, reclaiming my time, first of all, to say that is the most baffling thing I have ever had said. It is going to take me a while to figure out what it could possibly mean, if anything.
But secondly, with regard to executive compensation, of course the shareholders would bear the cost if there was one. Our point there was since the SEC has mandated the disclosure and mandated the disclosure be printed in the proxy, there will be no cost to voting on it.
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Mr. FRANK of Massachusetts. Mr. Chairman, I move to strike the requisite number of words.
My problem with the answer the gentleman from Texas gave my friend from North Carolina is he voted for the amendment from the gentleman from Alabama to kill this fund before he knew whether his amendment would be accepted or not.
The gentleman says he doesn't know anybody in this body who would turn his back on communities. He has a far more limited circle of acquaintances than I would have thought for someone who had been here this long.
The fact, though, is that the amendment from the gentleman from Alabama would have, if it passed, killed the fund. The gentleman from Texas voted for it. Had he been successful in that vote, there would be no fund for him now to ask for.
Now, I thought my friend from Mississippi who has been an eloquent and passionate defender of the interests of all the people in the gulf made a very good point. As I said to the gentleman from Houston, Mr. Green, yes, I think we should look at the needs of Texas. We did some in the hurricane bill in terms of vouchers.
I'm prepared, if this bill gets to conference, to accommodate. We may have underestimated the physical destruction in parts of Texas. I don't think we should now pick a number, but no one had approached me. Mr. Green from Texas had approached me, and I said I would work with him. I would be glad to work on it.
I do think when the gentleman says we couldn't expect him to vote for a housing fund that ignored his community, he voted to abolish that fund before he knew what would happen to his amendment. Maybe he just thought the die was cast, but I'm perfectly prepared to work on this.
I hope the amendment is defeated. I don't expect the gentleman to withdraw it, and I would be glad to then look at the arguments about how much destruction there was in Texas, and I would undertake to find some way to try to help in Texas. Of course, the gentleman will probably vote against the whole bill, and if he succeeds, I won't be able to help him, but you can't help everybody all the time. All you can do is offer.
So I hope that we do get a bill through, that it has the housing fund. I hope this amendment is defeated, but I do think that when we look at the concentrated destruction in the part of Texas, something not statewide, and the reason we did Mississippi and Louisiana was we felt the destruction there was more statewide, not the whole State, but it was fairly widely distributed. It would appear there was a more narrow geographic impact in Texas, and I would think that is worth looking at.
And if the housing fund survives the four or five more Republican efforts to kill it, chop it, dice it and slice it, which are probably coming in their infinite list of amendments, and we do get it to conference, I will be glad to work with the gentleman.
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Mr. FRANK of Massachusetts. Mr. Chairman, I am going to insist on my point of order.
I am moved, and I mean this, by the eloquence of these arguments for adequately funded public service. I hope all Members will listen to this.
But unfortunately, this is beyond the scope of this bill, which is housing related. I, therefore, must insist on the point of order, not out of lack of sympathy for my two colleagues, but because if we open the floodgates, we would get swamped. So I do insist on the point of order. It is not germane.
The Acting CHAIRMAN. Will the gentleman state the point of order.
Mr. FRANK of Massachusetts. Yes, the point of order. This is beyond the scope of this bill.
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Mr. FRANK of Massachusetts. Mr. Chairman, if I might say in response, it is all within the context of housing. This is a very narrowly specifically defined housing bill.
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Mr. FRANK of Massachusetts. I thank the gentleman, and he and I have been working together on a lot of this. I am glad he is going to withdraw it and we won't be proceeding further, but I would note that a number of recent developments in the mortgage field have made it clear that securitization is not the absolute unmixed blessing that people once thought it was. There are advantages to portfolio and there are some disadvantages. There are obviously advantages in terms of liquidity being created through securitization, but there are some problems. So I thank the gentleman for raising this issue, and it is one we will continue to work.
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Mr. FRANK of Massachusetts. Mr. Chairman, I move to strike the requisite number of words.
Mr. Chairman, this is another version of the effort to kill the fund. It is very similar to amendments we have had before. I will ask Members to draw on their memories. I think at this point they would try to remember than stay up an extra 10 minutes listening to the debate very similar to what they have had before.
It is subject to the frailty which the gentleman from North Carolina (Mr. Watt) pointed out before, since we have had a similar amendment before; namely, that it would give to the Director the right to cancel this. It doesn't ask just for information from the Director for us to take into account when we do this after the sunset; it empowers the Director to end it.
And it also says: Will not result in increased costs to borrowers on their residential mortgages.
There may be a de minimis cost increase. The way this is worded, a director would have to find that there would be no cost increase at all, not 10 cents, not $1 a mortgage.
I do not think it is intended mainly to deal with the soundness of the enterprise; I think it is dealing, once again, with an effort to try to kill the fund, which we have had five or six votes on already and a couple of more pending amendments.
The other factors, other than it might raise the cost of the mortgage, are already in the text of the bill and they are already factors that the Director is required to study.
So since we have talked about this before, I do not think at this hour anybody is going to bring any new knowledge.
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Mr. FRANK of Massachusetts. Mr. Chairman, I move to strike the requisite number of words.
And I do want to congratulate the gentleman from California for a very nonduplicative amendment. It is an amendment that is different from all the other amendments, and I am glad to see it. I almost feel like it was Passover; we finally have an amendment that is different from all the other amendments.
The question I have for the gentleman that was raised here, and he may have explained it as I was going over this. He did submit it in a timely fashion, so we should have checked it earlier. What about a foreign visitor who is in the country legally, say on a student visa. Would you be able to purchase a home on this?
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Mr. FRANK of Massachusetts. Not an investor, but someone who is here under a student visa that might not have a Social Security number, is not working, is here under a student visa and maybe can't work. Could that individual buy a home?
Mr. DOOLITTLE. You would have to be entitled to have a Social Security number, which, as I understand it, would be someone who is employed here.
Mr. FRANK of Massachusetts. But we do have people here, for instance, who are here as students. There are wealthy people who come here to study. In fact, if you find someone paying full tuition in a college, she is probably from another country. And if that parent wanted to buy a home for that student, I don't believe they would have to get a Social Security number; I believe under a student visa you might not be able to work.
Mr. DOOLITTLE. A parent wouldn't need the Social Security number.
Mr. FRANK of Massachusetts. I understand that. But does every student here under student visa have to get a Social Security number? I am told in some cases under a student visa you can't work. If you are here as a student with wealthy parents, the parents want to buy you a home, you might not have a Social Security number and this would keep you from buying a home.
Mr. DOOLITTLE. Well, if the parents want to buy you a home, it would be their investment.
Mr. FRANK of Massachusetts. No, excuse me. The gentleman first said it wasn't the parents. The parents live in another country. The student is here under a student visa, not working, for a 4-year course of study. Could the parents from another country buy that student a home under this bill if the student didn't have a Social Security number?
Mr. DOOLITTLE. As I understand it, Mr. Chairman, the answer to that would be yes.
Mr. FRANK of Massachusetts. How could they if the students don't have a Social Security number, how could you buy them a home?
Mr. DOOLITTLE. Well, because the owner of the home is the parents.
Mr. FRANK of Massachusetts. No. The gentleman is obfuscating now. The parents live in another country. The parents give the student the money so that the student can buy the home. What about a student lawfully in the U.S., under a student visa, whose parents in another country want to finance the purchase of that home? The student doesn't have a Social Security number, maybe under the visa can't work. I think that is the case. The student wouldn't be able to buy a home.
And I do agree that we should tighten up the rules on people here illegally, but as I read this I think it may sweep too far, impose too broad a mandate on Fannie and Freddie over things they can't control. And there may be other categories, but somebody here under a student visa whose family lives in another country, is prepared to finance the purchase of a home, it would appear to me that would make that impossible.
I yield to the gentleman.
Mr. DOOLITTLE. It is true the student himself wouldn't be able to purchase the home. But the parents----
Mr. FRANK of Massachusetts. Again, the gentleman is simply misrepresenting the question. The parents live in another country. People in Saudi Arabia don't have to have Social Security numbers. So the parents are in another country; the student is here without a Social Security number. How does the student buy the home?
Mr. DOOLITTLE. Mr. Chairman, I thought I made clear, the bill allows for foreign investment in the country. The student, under the provisions of this amendment, himself would not be able to buy the home if he were a student not able to work, therefore not having a Social Security.
Mr. FRANK of Massachusetts. The gentleman's interpretation in foreign investment is the parents buy the home for the student. Well, if the student had enough money on his or her own, then the student couldn't buy it.
Mr. DOOLITTLE. Then the student couldn't buy it.
Mr. FRANK of Massachusetts. Well, I don't understand why we would say that. There might be students who have the money to buy it. And this fiction that students who buy a home, parents who buy a home for their own child to live in are foreign investors seems to me to import a fiction to get around an excessively rigid bill. And there may be other categories of people who are lawfully in this country who don't have Social Security numbers and could have the money to buy a home, and I am unpersuaded that we should prohibit that.
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Mr. FRANK of Massachusetts. We might be able to work this out. I am really concerned about the students and others. I am prepared to say that I would be willing to see that this bill is in conference. The gentleman obviously can press ahead. I going to vote against it at this point because it does seem to me that there are categories of people who can lawfully be in the country who have money who could buy a house, and I don't think we want to stop it.
There will be some enforcement issues that we could work out, but I would hope we could more clearly define it; that is, I do think it's important that we say that this be confined to people who are illegally here. But relying on the Social Security number as the exclusive validator of someone's legal presence in the U.S. seems to me not good policy.
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Mr. FRANK of Massachusetts. Mr. Chairman, I move to strike the last word. The gentleman overstated what I said. I do agree as to B. I would say this, and B, I think is perfectly reasonable. I think it might be hard to administer, but I would certainly, I would want to agree to B.
I have a problem with A for this reason. We got CBO to score this. CBO scored it based on a tax reduction, and then there's a repayment in the REFCORP bonds. There's a fairly complicated proposal that we accepted from CBO to keep it revenue neutral, and it includes a tax deduction at one end, but a payment back at the other end. If the gentleman would be willing to ask unanimous consent to strike A, I would be prepared to be in favor of B. We could go back into the whole House, we could get unanimous consent. The problem is that if we strike A, I'm afraid it could unravel or scoring from CBO which assumes that they could deduct it and they would get the deduction, but CBO then said the government will lose money because you deducted it and we make up for another way with payments for the REFCORP bonds. I don't always understand what CBO says, but I can say that it's revenue neutral, recognizing the tax deduction, but making a payment that offsets that.
So if the gentleman would agree, I would certainly agree, because I think B is a reasonable effort to do this. I'm not sure how effective it will be, but I agree we should try. We are not sure about the pricing. I know procedurally we could do this, so if the gentleman would be agreeable, I would hope we could do that. If you would ask unanimous consent to modify the amendment by dropping A. If not, I will oppose this amendment, but I will move to, if I am successful in opposing it move to incorporate B when we get to conference. But I think a better way to do it would be to get unanimous consent to modify the amendment.
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Mr. FRANK of Massachusetts. No, I do not. I can tell the gentleman that what CBO, we asked them about the scoring, they said there would be a cost because it would be a tax deduction. But they then made up for that by requiring some of the funds to go to help pay off the REFCORP bonds which are left over from the S&L bailout. And I do know that's what was done.
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Mr. FRANK of Massachusetts. Yes, I was just going to kill time while you were looking so that, you know, we look like even though it's midnight, we're not all comatose. And as I said, alternatively, because it does cause us problems in the scoring and technical ways. It does seem to me the key is section B, and I would be agreeable to accepting section B now. Alternatively, I would hope that it would be defeated and we would put section B in conference.
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Mr. FRANK of Massachusetts. Parliamentary inquiry, Mr. Chairman.
The Acting CHAIRMAN. The gentleman will state his parliamentary inquiry.
Mr. FRANK of Massachusetts. What steps would be needed for us to have the gentleman get unanimous consent to modify his amendment by striking section A?
The Acting CHAIRMAN. The gentleman from New Jersey could request unanimous consent to modify his amendment the way he so chooses.
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Mr. FRANK of Massachusetts. Mr. Chairman, I move to strike the last word.
Mr. Chairman, this is not an entitlement. It isn't close to one. It cannot get out of control. The only money that can come from this is very clearly limited to 1.2 basis points on the mortgage portfolio of Fannie Mae and Freddie Mac.
The gentleman misstates the problem of entitlements if he thinks this is a problem. An entitlement is when the Federal Government, without necessarily a funding source, says if you are X, if you have these characteristics, you are entitled to this amount of money. That is Social Security and that is Medicare. That is not this bill. This bill does not entitle anybody to an affordable housing fund. It does not say if the population grows at a certain rate, then there is the demand for spending. It defines the spending source, a nontax spending source. It says 1.2 basis points of the mortgage portfolio. It doesn't entitle anyone to housing.
Social Security and Medicare, he mentioned. Those are entitlements. That means if you are a certain age and have a certain characteristic, you are entitled to receive the funding.
No one is entitled under this bill to receive housing funding. This is an authorization of spending, but it is not an entitlement to receive it.
Secondly, there is nothing secret here. It says it will be transferred if there is enacted a provision of Federal law establishing the Affordable Housing Trust Fund. That means it only becomes operational if this Congress decides in open session, with another 47 duplicate amendments from the Republican side, to deal with it. We will have a dozen roll calls to make sure that it happens.
I should also point this out. Why do we do it this way? To make sure we meet the PAYGO issue. This bill creates a fund out of Fannie Mae and Freddie Mac profits. We have not yet got any consensus on how best to spend it after the first year when it goes to Louisiana and Mississippi. So we say to meet budgetary requirements, we don't want to be in a situation where we create a pot of money in one bill and then in the second bill decide how to spend it. This means that when we get to the collective decision in open session about how to spend it, whether it goes through the States, whether it is goes through HUD, whatever method we choose, we will not be charged with a source of funding. We will simply take the source of funding and hold it in limbo after Mississippi and Alabama and it will catch up if this Congress decides to do it with the method of distribution. That is not an entitlement. An entitlement is when you as an individual are legally entitled to receive money from the Federal Government because of your status. No one is entitled under this bill. No one gets the right to say I'm such and such, build me a house, rent me an apartment. This says a fixed sum will go at a limited rate, a percentage of the mortgage portfolio, and Congress will decide how it will be distributed.
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Mr. FRANK of Massachusetts. Mr. Chairman, I very much resent the gentleman from Texas simply doubting my words so blatantly. You do not create an entitlement by accident. Secondly, of course, he misstates the word ``entitlement.'' An entitlement means that you as an individual are entitled to receive the money. That has never been contemplated here. Nothing I ever suggested says it. I repudiated the notion. The gentleman says, yeah, but who knows what he is thinking? I really do not believe the gentleman has any basis for impugning these kinds of motives to me. I am simply repeating what the gentleman said. Well, he says it is not an entitlement but how can we be sure?
Because the committee which I chair where I have talked frequently with all the members, including certainly the majority, I know what we intend. It is not to create anything remotely like an entitlement. An entitlement means that individuals will be able to say give me housing, I am entitled to it legally. What we are saying is we will set up a housing fund. We will debate how it is distributed, but it will never be close to an entitlement. No one has ever suggested that any individual would have the right to demand, as you do on Social Security and Medicare, which makes then entitlements, the funding.
I said no to PAYGO because I rejected the assumption that it was necessary. This meets PAYGO. It totally meets PAYGO. Has scored this as revenue neutral. We asked them from the standpoint of the Federal Government, and it is revenue neutral. You don't need PAYGO with something that is revenue neutral. What it says is that the Congress, not me personally or a small cabal, will decide that we are going to create an entitlement when no one is looking. It says that having reserved this money in a revenue-neutral way, we will then decide as a Congress how best to distribute it but to distribute it as a housing fund, not as an entitlement. There has never been any suggestion that it would be an entitlement. It is not remotely going to be like Social Security and Medicare, and it cannot be a runaway fund. It is limited to 1.2 basis points of the mortgage portfolio of Fannie Mae. That is an entirely different funding mechanism than an entitlement funding mechanism.
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