NEW DIRECTION FOR ENERGY INDEPENDENCE, NATIONAL SECURITY, AND CONSUMER PROTECTION ACT AND THE RENEWABLE ENERGY AND ENERGY CONSERVATION TAX ACT OF 2007--Continued -- (Senate - April 03, 2008)
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Mrs. McCASKILL. Mr. President, I commend Senator Sanders on his amendment and look forward to supporting it. We have a lot of work to do on credit cards. It is much worse than people realize in terms of some of the practices the credit card industry has employed. One of my favorites is trying to lure people to their limit on credit, and when they get them there, raising their interest rates and telling them: Well, you are at your credit limit.
I can give many examples of how that practice is utilized, including sending people the check already made out so if they sign their name on that check and use it, then they are at their credit limit and up pops their interest rate. All kinds of tricks are used to try to--by the way, don't ever try to pay off a bunch of credit cards because it is hard to pay them off. First, they don't want you to pay in full every month and they don't want you to pay them off. For gosh sakes, they don't want you to cancel a card. They will immediately take notice you lost your card because they are on the hook. In fact, I pointed out in one of the hearings we had to the credit card executives, the only thing that is easy to understand on this is the first line which says if you lose your credit card or your credit card is stolen, call this phone number because they know they are on the hook if the credit card is lost or stolen, so they are interested in you getting to them in those circumstances. All the other circumstances you press this number and maybe you will get someone who will talk to you after you have hung on the phone for 2 hours.
I do not rise to talk about credit cards today. I rise to talk about reverse mortgages. I have an amendment that will be called up at a later time. I am proud we have been working on this amendment. We had a hearing on this subject in the Aging Committee. We have been working with Senator Shelby and his staff. We have been working with HUD. AARP has been helping with this amendment. They did a massive report that they issued about reverse mortgages.
If we look at the subprime mess and sit back and say, what caused the problem, the root of the problem is the people selling the subprime mortgages had no risk. If you have a risk, you are careful. If you have no risk, then it is very simple: I just have to close the sale.
We are doing the exact same thing with reverse mortgages. If you are watching any cable TV--and probably way too many people in this Chamber are watching way too much cable TV right now because everybody is watching the cable news channels because we are all addicted to the Presidential race and every twist and turn it encompasses--if you are watching any of the cable news shows, you are seeing advertisements over and over again by Robert Wagner, Pat Boone, and all these familiar, trusted faces saying: You know, don't miss out. There are advertisements that are being marketed to elderly people across this country that are saying: Don't pass up this Government benefit you are entitled to.
I have to tell the truth, I don't think anybody envisioned reverse mortgages were going to be called ``a Government benefit you are entitled to.'' Why are they saying that? They are saying that because ultimately the taxpayers are on the hook for these loans.
Guess what. The people who are selling them are making commissions, and they have no risk. We kind of like these reverse mortgages around here because, guess what, we make some money on it, too. That is, the Federal Government. So there is a push to lift the lid on how many reverse mortgages can be marketed to elderly people because the Federal Government is getting some of the money when they are sold. But we are going down a dangerous path because we are marketing a product that is complicated and expensive to the most vulnerable population in America.
For many of these elderly people, all they have is their home. For many of these elderly people, they do not have a loved one with whom they can talk about whether this financial instrument is a good idea.
Don't get me wrong, some reverse mortgages are good and they may be appropriate in some circumstances. But here is what is not appropriate: We require counseling. We have appropriated a whopping $300 million for counseling. They have to have counseling in every case, so guess who is paying for the counseling? Bad news: The lenders are paying for the counseling. So the same people who want to close the loans are paying the counselors who are supposed to be giving these elderly people advice that is unbiased as to whether this is a good idea for them.
The amendment will step up to the plate and say we are not going to repeat the subprime fiasco with the Nation's ``greatest generation.'' We are going to, in fact, fund the counselors so they get good, independent information. We are going to make sure those counselors are certified. Right now, they can have a criminal record, they can have no training. This is the wild, wild west out there selling a financial product that is expensive and complicated to our elderly. It does not take a rocket scientist to figure out that is a dangerous combination.
The other thing this amendment does is it is going to prohibit someone who is marketing one of these reverse mortgages from being able to sell another product. Believe it or not, there are actually some people who are sitting down with elderly people right now in America saying: We are going to get you a reverse mortgage and, by the way, at the same time, we are going to sell you a deferred annuity. I don't know how these people look themselves in a mirror.
We had a witness in front of our committee whose mother was in her eighties and sold a deferred annuity and a reverse mortgage at the same time. It is unconscionable to make the sale and make the money. It is a get-rich-quick scheme for some of these sales people. If we can provide certified counselors who are truly independent to make sure that every elderly person understands exactly what they are getting into, and if we can make sure they are not being marketed products that are inappropriate by the same people who are selling them reverse mortgages, and if we can make sure we are not closing a blind eye to this because we are benefiting in the short run from the marketing of these products, then I think reverse mortgages have an appropriate place as one potential help to people in their elderly years who need to get the equity out of their homes for emergencies or medical bills or even to send a loved one to college. Right now, it is a dangerous situation.
I look forward to hopefully having unanimous, bipartisan support for this amendment. As I say, HUD has been very helpful in drafting this language, along with AARP, along with our colleagues on the other side of the aisle. It is well thought out. I think it is very appropriate, noncontroversial. It is not opposed by the industry. There are many good guys who are doing this work. We want to make sure we are protecting the elderly from the bad guys and making sure we are not standing here 5 years from now saying: Why didn't we do something about reverse mortgages? It is the same kind of dangerous mix we have in the subprime mortgages.
Mr. President, I yield the floor.
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