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Mortgage Reform and Anti-Predatory Lending Act

Floor Speech

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Location: Washington, DC


MORTGAGE REFORM AND ANTI-PREDATORY LENDING ACT -- (House of Representatives - May 07, 2009)

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Mr. FRANK of Massachusetts. Mr. Chairman, I am here to correct a mistake I made in my haste to get the markup concluded so we could have plenty of time to get the reports done, the bill on the floor. I agreed to an amendment that I had not read carefully.

The amendment would ban any organization, any organization in America, from receiving housing counseling funds if anybody in that organization is indicted by any prosecutor anywhere for Federal election or voter fraud.

So I rise to vindicate an important principle of American law that indictment should not be a cause of serious penalty, that people should continue to be presumed innocent until proven guilty.

To allow any prosecutor, anywhere in America, to tell any organization that it is ineligible for these funds, simply by an indictment, is, it seems to me, inappropriate.

I would point out that while there is an effort to claim that somehow this is specific to one organization, that may be the intent, but this bill earmarks no funds for any organization.

And it says, here is what it says about the funds: The Secretary shall make financial assistance available to HUD-approved housing counseling agencies and State housing finance agencies. So we have HUD-approved counseling agencies--these are approved now on the list from the last administration--and State housing finance agencies.

I have some confidence in them and those who are worried, my amendment says if there is a conviction and the person isn't fired, you cut off the funds.

But to cut off funds that were given by an approved HUD counseling agency because once persons anywhere in America were indicted by some prosecutor, is a violation of the basic principle of fairness.

I reserve the balance of my time.

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Mr. FRANK of Massachusetts. I yield myself such time as I may consume. The gentlewoman from Minnesota said, ``Do we want to allow funding for people who employ people who are under investigation?'' Yes. I don't want to live in a society where the mere instituting of an investigation by any prosecutor anywhere shuts down lawful activities.

Now, she said an organization that's under indictment, but the amendment goes far beyond that. Any individual member of an organization, no matter how far flung, apparently, according to the gentlewoman from Minnesota, if an investigation begins of anybody, you shut them down.

The gentlewoman from Minnesota mentioned someone who has been convicted. Under the amendment I offered, that would end it. We would either have to fire that person or lose the funding.

Mrs. BACHMANN. Will the gentleman yield?

Mr. FRANK of Massachusetts. No. The conviction triggers it. No question. That's what is in the amendment. My amendment says if you are convicted, it's triggered. But to say that any individual who works for any organization who's indicted, shuts it down. The gentlewoman said, Are you on the side of ACORN?

Mrs. BACHMANN. Will the gentleman yield to answer your point?

Mr. FRANK of Massachusetts. No.

The CHAIR. The gentleman from Massachusetts controls the time.

Mr. FRANK of Massachusetts. The issue is this: the gentlewoman, I think, inaccurately says, Are you for ACORN or the American people? This bill says nothing about ACORN. This bill says that approved HUD counseling agencies and State financing agencies can make the choice.

What I think the amendment says is this: Are you for the principle of American justice that says the mere institution of an indictment by any prosecutor anywhere, at any level?

Mrs. BACHMANN. Would the gentleman yield?

Mr. FRANK of Massachusetts. Mr. Chair, I have told the gentlewoman I would not yield. Could she be instructed that that is the answer that she's going to get, and to stop interrupting?

The CHAIR. It is apparent the gentleman is not going to yield. When a Member has asked a Member under recognition to yield several times, and it becomes apparent that the Member under recognition is not going to yield, the Member shouldn't continue to ask him to yield or otherwise interrupt him.

Mr. FRANK of Massachusetts. There are some basic rules like the ones of debate. Also, the fact that I said that to empower any prosecutor anywhere, at any level. And this isn't about ACORN. We don't sit here to judge on this or that organization. The gentlewoman said we don't judge guilt or innocence. Well, the amendment tries to do that.

The amendment says: a guilty finding by statute; in the absence of a guilty finding, in a court of law. Because if there's a guilty finding in a court of law, under my amendment, then this denies funding to people.

There are a lot of prosecutors. And it's not just ACORN. There are a lot of organizations, including political parties in the State of New Hampshire, near me. The Republican Party operatives were convicted of election fraud. I don't think that means you go after everybody else. It certainly didn't mean pending indictment you do this. There ought to be a bright line between penalties for indictment and for conviction.

Now if the amendment had said a pattern of indictments, that's a different story. It might have been a better argument. But this says a single indictment of any individual by any prosecutor for any organization anywhere in American has these negative consequences.

I think we have seen enough of prosecutorial misconduct, whether it was Senator Stevens or whether it was Members on both sides of the aisle, whether it has been organizations that have been prosecuted. I don't think we want to set that principle. Remember, this is precedential. Once we set as a body the legal principle--apparently, it was in the earlier bill. It shouldn't have been. If I missed that, I apologize.

I want to now repudiate the notion that the action of a single prosecutor who may be politically motivated to indict anybody anywhere for election fraud, disables that organization, forces the organization to fire an individual who may later be vindicated.

Yes, the gentlewoman said one of the employees of the organization that has motivated her amendment was convicted. My amendment says: in that case, you either fire the person or you lose the money.

Conviction ought to be the standard. But a single indictment by a single prosecutor anywhere, I do not think that is the rule of law under which Americans wants to live.

I yield back the balance of my time.

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Mr. FRANK of Massachusetts. First, Mr. Chairman, the gentleman's description of the safe harbor refers to an earlier version of the bill. In the committee, a bipartisan amendment offered by the gentleman from Delaware (Mr. Castle) and the gentlewoman from Illinois (Ms. Bean) significantly increased the safe harbor so it is not a 30-year fixed mortgage only that is allowed. Variants of time, certain ARMs, it is much more flexible.

The gentleman's comments apply accurately to a provision that is no longer in the bill; but it does not apply to what is in the bill.

My second point is that I am surprised at the back-and-forth attitude some of my most conservative colleagues have toward the Federal Reserve system. On the one hand, there has been a great deal of concern, which I share, about the unlimited power of the Federal Reserve in some areas. But time and again we are being told, as in this amendment, we should yield to the Federal Reserve our constitutional power to legislate.

This amendment says we will vote, but the bill will not go into effect until the Federal Reserve gives us permission. Now I have a good deal of confidence in Mr. Bernanke, but the notion that we would cede to the Federal Reserve the power to enact legislation, where is Ron Paul when we need him? When did the Federal Reserve become the constitutional equal of the Congress of the United States?

So on that ground alone, I would oppose this amendment.

I reserve the balance of my time.

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Mr. FRANK of Massachusetts. Mr. Chairman, first I guess I have to apologize to the gentleman from Georgia after listening to what he said. He chided me, mildly, in a friendly manner, for mentioning the dimensions of the safe harbor, he said it wasn't part of the bill, but I was only responding to his description of it. So I listened to him; he said the safe harbor was too narrow, it would push people into a 30-year. I responded. I thought when he raised it that it was relevant.

Beyond that, though, we do have this issue: do you tell the Federal Reserve that it will decide whether or not this goes forward? It also says, and there is a lack of balance here. If it says it will reduce the availability by any amount. Well, to some extent the purpose of this bill is to reduce the availability of credit.

If Members believe that people got mortgages who shouldn't have been able to get them, then they ought to support a bill that will reduce the availability of credit. Frankly, the profligate availability of credit is a major reason for the current problem. So, yes, there are people who used to get mortgages who won't get them under this bill. Some lenders don't like that. There are lenders who made loans and they won't be able to make the loans under this bill, but that is precisely the point. The point is not to allow credit to be as loosely granted as it was even for qualified mortgages. People got mortgages who shouldn't have gotten them.

Now if you believe that not everyone who got a mortgage in the past should get a mortgage now, then it would seem to me you want to reduce the availability of credit. The question is: how do you do it? Do you do it in a sensible way? What is the balance? That is what we think is achieved in this bill.

I reserve the balance of my time.

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Mr. FRANK of Massachusetts. I yield myself the balance of my time.

Yes, that is exactly the issue. The gentleman says, surprisingly to me, we want to increase the availability of credit.

Let's understand the problem. Too many loans were made to people who shouldn't have gotten them. In some cases it was the fault of the borrower; in some cases it was the fault of the lender; and in some cases the fault lies elsewhere. Yes, one of the important purposes of this bill is to reduce the pattern of people getting loans who shouldn't have gotten them because they couldn't repay them.

So to say that the purpose of this bill is to increase the availability of credit, is it to have more subprime loans, more borrowers who can't pay back?

Now you want to do it with balance and you want to do it in a reasonable way. I believe we deal with that. If there are questions do we go too far one way or the other, those are legitimate. We discussed a lot of those in committee. There were a lot of amendments that were adopted.

But I accept my colleague from Georgia's definition as the heart of the matter: Does this bill, if it is enacted, mean that fewer mortgage loans will be granted going forward than were granted in that period from 2002 to 2006, as the gentleman from Texas' amendment shows, when subprime mortgages shot up? I hope so. I hope that we will have fewer mortgages granted to people who couldn't have paid them.

Now other people, we hope things will go better. With the FHA piece, we hope to do even more in making credit available.

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Mr. FRANK of Massachusetts. Mr. Chairman, I commend this bipartisan effort to address an issue that is particularly important in their district.

I yield back the balance of my time.

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