American Housing Rescue and Foreclosure Prevention Act of 2008

Floor Speech

AMERICAN HOUSING RESCUE AND FORECLOSURE PREVENTION ACT OF 2008 -- (Senate - June 19, 2008)

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Mr. REED. Madam President, I come to speak against the proposal by Senator Bond which would significantly--in fact, catastrophically--undercut the affordable housing program we have included in this legislation, with the support of Chairman Dodd and Ranking Member Shelby.

This legislation is necessary. Even before we had a foreclosure crisis, hundreds of thousands of Americans--millions--did not have decent, affordable housing. So this is not something that is a temporary fix to the mortgage crisis; this is long-term solution aimed at addressing a long-term problem of not having enough affordable housing in this country. It is absolutely necessary.

The Bond amendment would essentially say: Well, yes, you can have a housing trust fund, but we are not going to fund it because the funding mechanism comes from Fannie Mae and Freddie Mac. Oh, by the way, you can create a home ownership protection program, but the first 3 years of affordable housing trust fund monies won't be available to help pay for it, which was how we dealt with the objection of Senator Shelby and many others that we not use public funds to help with the foreclosure problem.

This is a way in which we can accommodate many objectives: helping people facing foreclosure without using public funds and in the long term creating a permanent, affordable housing trust fund. There is no place in this country--none of my colleagues have places--where the constituents are not coming up and saying we need help with affordable housing. The rent is going up. We can't afford it. We are on the street. Please help us. That problem will not expire when this foreclosure crisis is over.

Let me also say I think it is entirely appropriate that Fannie Mae and Freddie Mac participate. They were chartered originally as quasi public entities. They have--we have given them and we continue to give them--affordable housing responsibilities. That is part of their mission, part of their mandate. Some would say: Well, listen, if that is the case, let them decide what they want to do. We spent years creating this affordable housing program. One of the criticisms of this program was that if you gave Fannie and Freddie control of the money or required them to spend in a certain way, it would become politicized. They would pick winners and losers not based upon needs in certain parts of the country but based on political advantage. That was a criticism that was advanced most strenuously by my Republican colleagues. So we have created an affordable housing program, part of which is lodged at Treasury and part of which is lodged at HUD.

If the Bond amendment is adopted, we are giving up the last chance we have for an affordable housing trust fund in this country, the last major chance. I urge opposition.

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Mr. REED. Mr. President, the CBO has scored the Banking portion of this bill so that not a penny of taxpayer dollars will be spent. This is not a bailout by taxpayers dollars. Second, the bill in no way benefits lenders. Lenders have to take a haircut, as Senator Shelby pointed out very clearly. Also, this bill is really an amalgamation of provisions, many of which have passed the Senate before, that have been discussed extensively in the Banking Committee. That are the result of numerous hearings.

This is not the case where we have created something completely new, completely out of whole cloth. There might be changes, but I think it is quite easy for committee staffs and individual Members to deal with these changes and if there are objections, to make amendments.

This motion is to kill this bill. As Senator Schumer pointed out, what we are losing here is help for hundreds of thousands of homeowners--not financial institutions. What we are losing here is a stronger regulatory structure to govern Fannie and Freddie. I have sat on the committee for years listening to people say: We have to get regulatory reform, GSA reform. We cannot let these institutions--Fannie and Freddie--operate without strengthened oversight. That is precisely what this legislation does.

So this legislation is about helping homeowners, regulating Fannie and Freddie, and has nothing to do with bailing out companies.

Countrywide is mentioned in this motion to recommit. Countrywide was trading a year ago at $38.89. It closed today at $4.83. It is subject to an acquisition by Bank of America. The market has penalized Countrywide. Bank of America will acquire it. By the time this legislation is effective, Countrywide very well might not exist as an entity in the country.

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