Chaired By: Rep. Barney Frank
Witnesses Panel I: Rep. Dennis Cardoza; Rep. Jim Costa
Witnesses Panel II: Tommy Jones, Mayor City Of Los Banos, California; Bill
Johnson, Director, Alabama Department Of Economic And Community Affairs, State Of Alabama
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REP. BARNEY FRANK (D-MA): We will convene the hearing. One of our two -- colleagues -- Mister Costa, would you take the witness stand right in front of you, please. I'm sure Mister Cardoza is on the way. I've explained to people that we had a very solemn process of an impeachment opening up and so let be now officially begin this hearing. We're joined by the senior Republican, Mr. Bachus. Let me -- the economic crisis that confronts us is nationwide, but, obviously does not apply uniformly in the nation. We're a very large country with different patterns of economic activity and there are places that have been hit unduly hard through no fault of their own.
The part of California represented by our colleagues, Mister Cardoza and Mister Costa, has been hit as hard as any and we believe, many of us, that it's entirely appropriate for us to recognize that we are one nation and to reach out. There are programs that subsidize public transportation in some of the country and other parts don't have them. There are programs that provide agricultural subsidies for crops that are not grown in much of the country. There are a variety of programs that help particular people in distress. Where there are natural disasters, we go to the aid of the people in that geographic region.
What we have, for the people in the areas represented by Representatives Cardoza and Costa, the equivalent of a prolonged national disaster due to its economic impact. And we think it's appropriate for the federal government to respond. So we (addressed ?) our colleagues to join us today because we are having a hearing on legislation which they have drafted and they've prepared. I can tell you that I've spoken with the Speaker of the House and with the Secretary of HUD and others. There is a wide recognition of the legitimacy of the points that our colleagues have made and this is the beginning of a process of which out there will be some response.
REP. SPENCER BACHUS (R-AL): Thank you, Mister Chairman for holding today's hearing and I welcome Congressman Cardoza and Congressman Costa, two very capable members of the House, and look forward to your testimony. It's also a pleasure for me to welcome Mister Bill Johnson, who will be testifying on our second panel of witnesses. And welcome him, also, back to the Financial Services Committee. We had the honor of his expert testimony last year at a Housing Committee Hearing on the Gulf Coast recovery effort. Bill has an impressive record of service to the citizens of Alabama.
In November of 2005, Governor Riley appointed Bill as the Director of the Alabama Department of Economic and Community Affairs, ADECA. ADECA manages hundreds of millions of federal grant dollars each year with some 230 employees. He also serves as the Executive Director of The Black Belt Action Commission, State Alternative for the Appalachian Regional Commission and State Alternative to the Delta Regional Authority. We thank Bill for being here and look forward to his testimony.
The Economic Disaster Area Act of 2009 attempts to solve the problem of rising unemployment and mounting declines in home prices by calling on the Community Development Block Grant Program, CDBG, to set aside funds for economic disaster areas. I certainly sympathize with my colleagues from California and their efforts to address the financial hardships in their congressional districts and I know that they are sincere. But I do have concerns that redirecting funds from a CDBG program may have unintended consequences for the overall program. CDBG funds are vital to the states.
And finally, $1 billion in CDBG funds were made available by this year's stimulus package. Unfortunately, expectations have not lined up with reality when it comes to getting stimulus funds out the door. And I know that is probably a problem in your district as well as mine. In Mister Johnson's testimony, he describes a process for distributing stimulus funds and the time it takes for the money to actually go to work in the local economies. I did vote against the stimulus bill because I truly believe that there were better ways to stimulate our economy. With that said, I would like to commend the officials back in Alabama, the governor and Mister Johnson and others, for providing a dedicated website with information about all the projects funded by the stimulus. And some of these will, you know, obviously be of help.
I think it's important for taxpayers to know how their stimulus funds are being used in real time. So, I thank Congressman Cardoza, Congressman Costa, and, as well as Mister Johnson, for their testimony and look forward to hearing from them and our other witnesses.
REP. FRANK: The gentleman from California, a colleague of our two congressional witnesses is recognized for two minutes.
REP. : Thank you, Mister Chairman. Thank you for holding this hearing. I have learned, in my many conversations with Mister Cardoza and Mister Costa, what's happening in our Central Valley. I'd be aware of it without their input, but they have brought it home to me in example after example. I don't know what is the right policy to do something about it, but I do know that what has hit the Central Valley and in other parts of California, and some other parts of the country, is every bit as great a disaster as the natural disasters that the federal government has responded to. And so I especially thank the chairman for holding these hearings and I yield back.
REP. FRANK: The gentleman from Texas for three minutes.
REP. JEB HENSARLING (R-TX): Thank you, Mister Chairman, and thank you for holding this hearing. I first want to commend my colleagues from California. I have no doubt that their particular districts have a lot of suffering, have a lot of human misery and they are putting forth public policy that they think is best to help their districts. I know it's a sincere effort. They should be commended for it. I do have a number of questions, though, about the approach and wonder if the approach of the legislation is, indeed, the best.
Number one, unfortunately, in this economy, I don't believe there's any one individual, one city, one county, one company that has a monopoly on human misery. Throughout our entire economy, people are suffering.
And although the unemployment rate in these communities are higher than the national average under this formula, I think the unemployment rate that really counts is the unemployment rate in your household which doesn't necessarily know geographical boundaries. That's where I believe that assistance should most be focused. And we have to remember, I know this would enlarge the definition of who could apply for CDBG funds, I know that, at least initially, it doesn't perhaps add to the financial burden of the taxpayer, but, as I look at history as my guide, the more people who qualify for the program, it's a matter of time before the expense of the program is going to go up.
And I look around at $700 billion spent for the initial bailout, $91.3 trillion for the stimulus plan, $410 billion for the Omnibus, now we have a proposed healthcare plan that could cost a trillion dollars, we're looking at a federal debt that will increase threefold, triple in 10 years, more federal debt that we've created in the previous 220. And, at one point, at what point do you get concerned that we're borrowing money from the Chinese, we're borrowing $0.46 on the dollar and we're sending the bill to our children and our grandchildren. I also wonder if all communities are created equal in the responsibility in which they've undertaken. Some communities may have funded extra golf courses where some didn't. Should a frugal community have to subsidize a non frugal community? Again, I think there are better ways to promote hope, jobs and opportunities within our communities, within our country, but I look forward to hearing the testimony of our witnesses and I yield back the balance of my time.
REP. FRANK: We will now begin in order of seniority as we do around here when there's no other reason to pick, with our colleague from California, Mister Cardoza who has been a strong advocate for effective action both nationally and particularly within the region he represents.
REP. DENNIS CARDOZA (D-CA): Thank you, Mister Chairman. As I begin today, I'd like to admit to the record two documents that detail some of the challenges that are faced on my --
REP. FRANK: Without objection, all materials that any of the witnesses wish to submit will be incorporated into the record.
REP. CARDOZA: Thank you, Mister Chairman, members of the committee, thank you for holding this hearing and for having me here today. Generally, when people think of California, they think of Disneyland, the beach, Malibu, San Francisco, Yosemite National Park. The Central Valley of California and my district might be referred to as the other California where we have drought stricken farms and vacant homes. In place of movie stars and beaches, we have block after block of abandoned buildings. You can see one of those subdivisions right here. We are proud to grow more than half of the nation's fruit and vegetables and tree nuts. Every house that can afford one, still flies the American flag on the Fourth of July.
As many of you have heard me say repeatedly, my district in Central California, in particular the communities such as Merced, Modesto, Stockton, and you will soon hear from the mayor of Los Banos, need help. We needed helps six months ago. We needed help a year ago. What has been put forward to fix the rest of the country is not enough to help us back home. Just this week, the Brookings Institute released a study that placed the three communities in or near my district among the bottom 10 weakest performing metro regions nationwide. What has become of our region of California is nothing short of an economic disaster. I'm here to ask you, no, I'm here to plead with you, to provide the relief we desperately need. My constituents have lost their homes, they've lost their jobs, and they've lost their hope.
They are looking to Washington and all of you for help. We need federal assistance and we need it now. When Hurricane Katrina devastated the Gulf Shore, our nation watched in horror as victims lost their jobs, and their homes. Mister Chairman, members of the committee, I've been saying for quite some time, the devastation in my district is very similar to that of Katrina but was not caused by one extreme event over the course of a couple of days. In the Central Valley of California, we, too, have lost our jobs, we, too, have lost our homes. However there has been no rescue operation. In fact, my constituents receive far fewer resources from the federal government than almost any region of our nation.
Regardless of whether your property ends up on the front lawn due to a storm or to an eviction Marshall, you are still homeless and your property is still in the front yard. Can you imagine, your family is evicted from your home, and your child looks up at you and asks, Daddy, where are we going to stay tonight? And starts to cry when she sees her favorite baby doll thrown out on the sidewalk. It's happening every day where I come from. Despite the collapsing economy and rising crime, the highest poverty levels in my district, the Central Valley receives only half the national average of federal dollars per capita.
According to the Census Bureau in 2008, the federal government disbursed an average of $8,475 per person across the country. In my congressional district, we received less than half of that. In Merced County, the number is $4,700 per capita. Stanislaus County received $4,500 and San Joaquin County received $4,800. We can't cope with the situation that we have and not receive additional help. I understand Mister Hensarling and others that our entire nation is hurting right now. I get it. But the fact is, we are hurting much, much worse. When federal disaster designations are declared, it's because the state and local governments cannot cope with the devastation that has been left in the wake.
That's exactly the situation in our district. More than 13 percent of our mortgages remain in foreclosure with three cities in my district having the second, fourth and sixth highest foreclosure rates in the country. Home values have plummeted 42 percent in my communities in the last year, in the last 12 months, and nearly 70 percent since the high of 2005. Despite the best efforts of the Obama administration, our homes are so far underwater that we don't qualify for assistance. The three biggest cities in my district are in the top 11 nationwide for unemployment. My constituents, the ones that still have work, make 33 percent less than the average American worker. Small businesses and neighborhood restaurants which were once packed with customers, are now empty and shuttered. Our longest serving community bank was swept into the foreclosure crisis and closed.
On top of that, my dairy farmers are on crisis and we have the worst drought in the country. Chairman Frank, members of the committee, my districts in the San Joaquin Valley are on the brink of falling off the map. I could stand before you and rattle off statistics all day. We've entered them into the record instead. But every single economic indicator points in the same direction. California's Central Valley is in economic freefall and economic disaster, if you will. In meeting after meeting, I've told my friends in Congress that the solutions we've been pursuing simply aren't working for areas like mine.
Today I'm presenting one of my ideas of providing additional assistance to those who need it most. And I look forward to hearing your suggestions for ways to improve this idea and help me get it passed into law so my communities and others like them around the country facing dismal unemployment rates and alarming foreclosure rates can get the help they need. The bill we are discussing today seeks to create a permanent program within CDBG that would provide additional safety nets to the hardest hit areas. Cities and towns across the country use CDBG funds to rebuild communities, create economic development, provide housing to lower income individuals, while in my district, like others like it, more qualify as lower income communities than anyplace else.
And now, the local government, and you will hear from Mister Jones, are more cash strapped than ever. In his case, he's cut 50 percent of his budget and, in order for them to keep the doors open, they need help. I'm going to truncate my remarks and just say that we are looking for additional ways to fund CDBG money, not to cut other people's funds. We are trying to figure out ways to be creative and now I'm working with the chairman on those questions. Mister Chairman, my district will not overcome this overnight. It will take unprecedented action to help us rebuild and recover.
But, on behalf of my constituents, and from the bottom of my heart personally, I want to thank you for the work that you've done and the assistance that you've personally, advice that you've personally given to me. I'm eternally grateful to you for holding this hearing. I look forward to hearing from my colleagues on ways we can improve this bill and I look forward to working with you as we, hopefully, schedule a markup maybe in July or when you can put it on your calendar. Thank you very much.
REP. FRANK: Thank you, Mister Cardoza, Mister Costa.
REP. JIM COSTA (D-CA): Thank you very much Mister Chairman. I want to acknowledge the hard work that you and your staff have done, both the majority and the minority members and staff to hold this legislation, this important legislation for the San Joaquin Valley that includes Congressman Cardoza's district and mine, and other that have been so impacted as the result of a combination of factors. Clearly on your outset of your comments, both the ranking member and Mister Chairman, you talked about the deep felt recession around the country. That is obviously clear to everyone. Every part of the country is suffering.
But what you need to know that I think makes a bit of a distinction in the case of the San Joaquin Valley, is three factors. A combination of three years of drought, combined with the fact of a meltdown of the dairy industry, and the housing foreclosures that have led the nation, compounded together have created a circumstance in which we have unemployment numbers that have gone from the single digit level a year ago, to now at 16, 18 percent, 20 percent. I've got, sitting in my district, Mendota, that has the highest unemployment levels in the state, 42 percent unemployment, Firebaugh 38 percent unemployment, Delano, the whole of Caesar Chavez with over 50,000 people and four high schools, has 34 percent unemployment.
When a third of the people in your community and a similar number in your county do not have jobs, that is depression numbers. Those are, we've moved from deep recession, in the communities that Congressman Cardoza and I represent, to depression unemployment numbers. And it's compounded because there are two major industries in the Valley, in the wonderful San Joaquin Valley that we're so proud to represent, agriculture and housing, and they're both in the tank. I have been, sadly, to tell you, and these illustrations point out part of the picture and I have others that we could have brought, of food lines. Because of the drought, some of the hardest working people you'll ever meet in your life that would normally be working today, to put food on America's dinner table, sadly, are in food lines.
The irony of that, because there's no water, no water to grow foods, without the ability to grow, we have no jobs. This bill would provide the president with the ability to declare certain counties economic disaster areas. To be eligible, the counties should have high rates of both unemployment in the county, and home value decline, as Congressman Cardoza and your staff have worked on this legislation so well. These areas would be targeted for relief for job creation programs, economic development projects, rehabilitation of low income housing units, helping to put people back to work and to revive local economies.
Congressman Cardoza and I are here to fight for farmers and farm workers and the farm communities of the San Joaquin Valley. The ranking member noted about the impact of the CDBG funds. It's important to note that this legislation, this legislation would not rob other communities of their allocated funds. We, obviously, are sensitive to the plights of the deep felt economic recession around the country. But it would supplement them when extenuating circumstances warrant this as in the cases of these communities and other communities, I would add, in Detroit and other places, where it's similarly felt.
Economic disasters are no less devastating than a tornado, a flood, or an earthquake. But, I'll tell you what's frustrating for Congressman Cardoza and I. You see a tornado, it's television, certainly it's sad, it's awful, you see a hurricane as in New Orleans, and people immediately see the disaster. A three year of a drought, it's not television friendly. People go, oh, well, you know, the people are still there. Oh, yeah, they're there, but they don't have jobs and the community suffers. This is a powerful took if this committee passes this legislation for areas like ours where unemployment has shot through the roof.
The ability to undertake pending projects, put people back to work, help them keep from losing their home under the foreclosure rates that Congressman Cardoza stated. The Central Valley of California is not the only area that has been ravaged by this nationwide recession, but we have extenuating circumstances that we've described to you. Counties in Michigan have also been severely impacted. But it's important to note, that all of our regions, throughout the country, sometimes rely on one industry or another and that's the case for the San Joaquin Valley with agriculture and housing.
Local governments and state governments, particularly in California, as you know, are in the tank. They need the additional support and I think the federal government, just as I supported the efforts with Katrina, supported the efforts that have been devastated in the Midwest and otherwise, we want the same level of support for the communities that we represent. This legislation clearly is not a silver bullet. We've got to do a lot of other things. But will go a long way towards helping deal with the regional economic challenges that we not only find in our San Joaquin Valley, the farmers and farm workers and farm communities that we are fighting for, but also for economic challenges that are felt across the nation.
Again, Mister Chairman and ranking member, those members of this committee, thank you, thank you again for your sensitivity, for your efforts to hold this hearing and to help us help these people who we represent as we deal, throughout this great country of ours, with the economic challenges that we face today. I would like to ask, for the record, to enter a University of California --
REP. FRANK: Without objection, everything will be --
REP. COSTA: They have a study that talks about and substantiates these impacts.
REP. FRANK: Thank you. I think we will excuse our colleagues now and call up our second panel and we will have a chance to ask questions of them. I say that because we have a chance to question our colleagues during we time, we may lose our ability to do this because of the impeachment. So, did you want to --
REP. BACHUS: I'd like start -- let me say this to both members, and I mean this sincerely. I'm stunned by the testimony and by the mayor's testimony of Los Pandas, is that -- ?
REP. CARDOZA: Los Banos.
REP. BACHUS: Yeah, this, I mean, I acknowledge upfront that most of our hurricanes and all of our tornados do not inflict this kind of damage on our communities. I mean, this is an unbelievable thing and so --
REP. FRANK: Long lasting.
REP. BACHUS: Huh?
REP. FRANK: The duration, it's not just the depth, it's the duration.
REP. BACHUS: I mean this, this is the perfect storm. And so, I will, and I want to express to you, you know, Devin Nunes, Congressman Nunes with the diversion of 500, it sounds like 500,000 -- (inaudible) -- tremendous amount of water, 500 acre feet of water, my Gosh, you know, which has dried out part of the Central Valley, San Joaquin Valley and both of you supported his amendment and I will say that that, actually, personally, to me, you know, had you voted against that, which is causing an economic devastation there and then you come out and ask for this, you know, I may, I might have asked you about that. But, you supported that. And, you know, that's causing some tremendous problems. So I want to just commit to the Chairman, and I don't know that it is this legislation, but, I want to commit both you gentlemen and to the Chairman that this side of the House stands ready to work with you.
REP. CARDOZA: Thank you.
REP. BACHUS: And that's not just a, I'm not just saying that. I sincerely mean it.
REP. CARDOZA: You always have, Mister Bachus and I appreciate your friendship and the collegiality you are extending. These are, we wouldn't be here asking, if it wasn't an absolute necessity. And, the Central Valley delegation worked, has a tradition of working together across party lines to try and do the right thing for our districts and, what we believe, the right thing for our country. And we embraced Mr. Nunes yesterday, as we always do in the Valley, that's our culture, and we just want to get it right.
REP. BACHUS: Now, property values dropped like 55 percent, I understand, it's just incredible.
REP. FRANK: (I don't want to interrupt the ?) witnesses, but I am impressed that Mister Costa and Mister Cardoza and Mister Nunes have crossed party lines. Maybe one day they'll cross ethnic lines, as well, those things still hold, those things -- (Laughter.)
REP. CARDOZA: For the majority of the Portuguese caucus, at least the Azorean caucus.
REP. FRANK: (All regards ?) to my witnesses, and we will call up our next witnesses.
We'll ask Mister Johnson to join Mayor Jones at the -- (off mike). We have, as mentioned, Mayor Jones of Los Banos and Mister Bill Johnson who is here at the request of the ranking member. He's the Director of the Alabama Department of Economic and Community Affairs and let's begin with Mayor Jones.
MR. TOMMY JONES: Good afternoon Chairman Frank and Financial Services Committee. I think Congressman Dennis Cardoza asked me to come to speak with you today because he is tired of my calling him asking him for assistance for my community. Hello, I am Tommy Jones, mayor of Los Banos. For those of you who don't know where Los Banos is, we're the smallest town of 36,000 in the heart of Central California. We're the small town that grew overnight to almost three times our size when residents of San Jose and the South Bay discovered we had affordable homes. We are the community that's watched our home prices escalate to the point many of our hometown residents could not afford a house.
We are a community that tried desperately to stay ahead of the curve of the boom. Tried to charge the right fees so growth could pay for itself, and tried to anticipate the what if's of economic change. And today, we are the community that has made the L.A. Times, N.Y. Times, Small Biz Magazine, and Wall Street Journal because we are the hardest hit community by this economic disaster. One in every five homes in Los Banos is either in foreclosure, has been foreclosed upon, or is about to go into foreclosure. Our unemployment rate is 20, is over 21 percent. The foreclosure rate is so high, that when we applied for COPS funding, the federal office called to see if we had made a mistake on our application. We didn't.
We are small town America facing an extreme financial hardship and as mayor and keeper of my city, I am here to ask for help. The economic disaster declaration is a tool for cities like Los Banos, who, on the surface may appear healthy but in reality are suffering from an economic crisis as disastrous as Hurricane Katrina. Let me see if you can, if I can paint you a picture of what it's like in our community. We sit in the middle of cotton and tomato fields. Up until 10 years ago, most of our residents worked in one way or another connected to agriculture, education or government. Today, a large portion of our community drives more than an hour and an hour and a half to the South Bay to work.
Since the bust in the economy, many of those drivers have been laid off and with those layoffs, came to lose their homes. Loss of home has meant an increase in our homelessness. Our homeless shelter now serves entire families two meals a day. Loss of home has meant a steep decline in property and sales tax. Loss of sales has meant the closing of long lived and new business and a decline in police and fire services because of the loss of tax revenue. But it doesn't stop there.
As I mentioned, we are an ag-based community. We are one of the communities faced with water shortages for our farms. Water shortages mean less fields are planted. Less fields planted mean layoffs of farm laborers. Layoffs mean loss of homes.
You see where I am going with this.
Our building construction community is now unemployed. Our banks have stopped lending. Commercial projects are currently stalled, because they cannot get additional bank lending. Even those companies that have perfect credit and have been in business more than ten years, as a city we have no money to assist.
And I am still not done.
Wednesday night we were to approve fiscal year budget. This year's budget was based upon a 35 percent reduction in property tax. Thirty-five percent. This on top of last year's decrease of 15 percent, but here comes the kicker.
Before the council meeting started, we received word from the County of Merced that our property tax had not dropped 35 percent as predicted, but an unprecedented 65.27 percent. That means our staff will have to cut an additional 450,000 (dollars) from the general fund.
We have already had to cut law enforcement and fire positions. We have laid off personnel to the point those still employed look frazzled from the work load. We have reduced services, supplies, and stopped future projects, because we were out of money, and now we have to try to find another 450,000 in cuts.
Our sales taxes are down. We lost two car dealerships last year. Our property tax is 55 percent below what it was last year. One in every five homes a foreclosure. Our unemployment rate is more than 21 percent. Our homeless population now includes complete families.
We need your help.
Our community, our county tends to get over load. We are rural. We are small. We are laid out between wetlands and ag lands but our need for our citizens is not any smaller than the needs of those that have faced hurricanes or flood. We cannot provide enough fire and police to protect our citizens, but we must -- we may not qualify for cops funding because we don't have the same large crime statistics as cities like San Francisco, Oakland, or Chicago.
We have the highest foreclosure rate in the country but did not receive federal stimulus dollars because of the HUD formula. Instead we had to wait for the State's allocation, and I might add, we are still waiting.
This is why I am here to plea, to beg, to pray for the Economic Disaster Declaration legislation. We need help and we need it now. Our businesses cannot qualify for loans even though they've been in business ten, fifteen, even twenty years.
CDBG funding given to our area because of our plight would provide them an opportunity to keep their doors open and stop the hemorrhage of unemployment. CDBG funding to assist people purchasing homes would help decrease the number of vacant neighborhoods and crimes associated with those vacancies.
Please think about Los Banos when you look at this legislation, and think again about our numbers. In just two years a 70 percent decrease in property tax. More than 21 percent unemployment rate and one out of every five homes a foreclosure.
This Wednesday marks the date when our city has to face the fact that we have no place else to go. We have bottomed out. Without your help, without a tool such as the Economic Disaster Declaration we will -- what will cities like Los Banos do?
I am Tommy Jones, Mayor of Los Banos, and on behalf of my community, I am asking you to vote yes for this legislation. Please give our community a chance.
And let me close with this: The last election was probably the greatest election that I have considered in my lifetime. Being a young boy that grew up in the South, when going through back doors were common. Being a young man coming from my second tour of Vietnam and coming home with my friends, and I was not allowed to go into the same place that they were. I know what it feels like to be a second- class citizen, but the citizens of my community now are experiencing that, and they are begging and praying for your help.
Thank you very much and thank you so much.
REP. BARNEY FRANK (D-MS): (Off mike.) All right. Mr. Johnson.
MR. BILL JOHNSON: (Off mike.) Yes.
REP. FRANK: Mr. Johnson, please rise.
MR. JOHNSON: Thank you.
Mr. Chairman, Representative Bachus --
REP. FRANK: I'd like to invite our colleague, Mr. Cardoza, to join us, if there will be no objection and pass along the --
REP. : (Off mike.) No objection.
MR. JOHNSON: Mr. Chairman, Congressman Bachus, I want to thank you for the opportunity to be here today to speak on this Economic Disaster legislation related to the Community Development Block Grant.
I want to also thank Representative Cardoza for proposing it.
There is no question that the economic devastation that we're seeing in this country is unprecedented, and it's incumbent on us as representatives of federal government, state government, and local government to look everywhere we can to try to find solutions for these very pressing problems that are facing our communities now.
As I hear the statistics that Mayor Jones and Representative Cardoza are relaying from California, I can't help but be astounded and shocked at the shear depression that is hitting the area. I want to say my heart is out to you.
We have been fortunate in Alabama. We've had a number of industries locate and the pressure and the momentum of that has kept up our economy and our home prices somewhat, but we are not an island. Our folks are suffering too, and my position with this agency, the Department of Economic and Community Affairs, we represent -- we have a number of funding streams that go out, and I'm hearing daily, continually from constituent homeless shelters that their client base is going up. Their contributions are going down.
Nonprofit domestic violence shelters, the pressure of the stress from these financial situations is affecting our families and an increase in domestic violence. There's not virtually any segment of our society that is not touched by this and I want to say I appreciate your looking at trying to do everything we can to address this situation.
As recently as just before we walked in, Congressman Bachus and I were talking about a large homeless shelter housing over 300 women in Birmingham, the Lovelady Center, 40 children that live there, struggling to get by and may have to close the doors, trying to find additional money out there to help them stay open. So really we are in very desperate times.
I want to reference also. I take the point that there's been a lot of help through CDBG for these disasters that have happened in other parts of the country, and we have benefited from those -- some of those funds used that way.
After Hurricane Ivan and Hurricane Katrina, we receive supplemental Community Development Block Grant money, and we appreciate that. I do however want to say that some three years after Katrina, we still have folks living in FEMA trailers even though we received Community Development Block Grant funds to help build houses, and really what I want to share with y'all today is not, you know, any for or against the Community Development Block Grant legislation here, but just some of the challenges with trying to solve problems with the Block Grant funds in general.
The Block Grant Program, there's not been virtually any city or community or citizens of any city or community that have not benefited from this program over the decade it's been in existence. It's a program with a lot of safeguards in place. Very little of the money goes the wrong way. All right. The problem with that is there is also a lot of strings attached to it. A lot of onerous regulations that make the implementation of this program very hard to do in -- for short-term fixes.
As I said we had still three years later still folks living in FEMA trailers, and we're still short $100 million to having enough money to help everybody that was affected on the coast, and so the challenges of trying to use the Block Grant Program is one that I think as you go down this path of trying to see what you can do to declare certain areas economic disasters and use this particular program to help folks, the main thing that I would ask that you focus on is how can you speed up the implementation of the program.
There are some requirements that after doing this program for six years I did not realize were imposed on us. I had an hour meeting with the State Examiners yesterday because our folks apparently didn't fill in a box that even the examiners didn't know what the box was for right on a Community Development Block Grant report. It's Form 60002. Whatever it is.
But this one of the onerous regulations that slows up -- when you're asking for help -- if this legislation gets passed, you're going to want to see something in three months, six months. Your folks are going to be expecting that, Mayor, and I know after the hurricane our folks were inspecting it, and it's embarrassing three years later to still be trying to help folks with funds that are sitting in the bank, and yet not be able to get out there and help people.
I literally, within the last two months, went down to the coast to the City of Coden. Ms. Darlene Culpepper (ph) is in a wheelchair because of diabetes living in a FEMA trailer, still, you know, sick from fumes of the FEMA trailer because we cannot get her help, so these are the challenges.
The Block Grant Program, as I said, has been tremendous asset for the citizens of this country, but it is designed for very large -- well what has happened over the years is because of the onerous regulations that the investment that tended to go to very big water and sewer type projects where you've got like a single project that it is easy to report on these different requirements.
When you start trying to use this program to do small projects, employ lots of people, it becomes very onerous to try to do this. Think about, you know, if you do a $400,000 sewer project, it's easy to figure out what you need to report, how many employees, things like that.
Think about trying to build a house on a small lot, one house. It's very onerous and if y'all can look at this as you're looking at this legislation. Obviously your folks when they -- when this -- if this passes, they're going to want to see something happen very soon, and it's going to be very difficult and possibly embarrassing a couple of years later if we've not addressed these onerous regulations that hamstring what I think is great programming.
I see that I'm out of time, so, Mr. Chairman, I turn it back to you.
REP. FRANK: Well, thank you, Mr. Johnson, and you did very concisely and sensibly stem up the dilemma. On the one end we worry about abuse and sometimes you can tighten it up too much. I mean it is true that one of the great things about the CDBG program is that there was very little scandal connected to it when people talk about abuses, but it may well be that we have gone too far.
And I -- I'll say this, when I was first on this committee in 1981 -- '83, the City of Fall River, Massachusetts, had gotten some flexibility in the CDBG funding, letting them be much more flexible with city services and they wanted that preserved, and I offered to do that for a lot of cities, and frankly at that point a lot of the city officials said, "Oh, no. Don't do that, because we don't want to have more claimants.
"You know, the more you open it up, the more people --
MR. JOHNSON: Yeah.
REP. FRANK: -- are going to come to us." So the City of Fall River, Massachusetts, continues to have written into the laws at the time a degree of flexibility a lot of us don't, so I very much agree with that. It's not a free gift necessarily, but it's important. Let me also say that both of -- and I think this is when you talk about the housing makes it clear -- (inaudible) -- certainly Mr. Cardoza and there's really two levels we have to address this.
One is aid to the municipalities, and we say -- you know, they said there were policy differences on this, and I know people talk about the niceness of tax cuts, but I first went to work in politics in 1967 in a campaign for mayor, and I've been watching it, and in forty-two years I have never seen a tax cut put out a fire.
There was another one with public service that it seems to me we need to provide and we have to be honest and say that at some point you have to come together and provide the revenues to do it. We just don't want to put it on the deficit. But in addition there's some things we need to do, and it's at two levels, and again, Mr. Cardoza has been the leading advocate in Congress to make this point joined by Mr. Costa and others.
It's the foreclosure crisis and that requires us both to provide the kind of funding that would help the municipalities and states meet public needs, but also we have got to improve our ability to help people avoid foreclosure. As long as individuals are losing their homes -- and of course it's not just individual people who said to us, "well, why do you use public money to stop foreclosures. People make the loans. Let them live with the consequences, the people who took out the money."
And then you point our, Mayor, the damage from foreclosure happens in concentric circles. The individual who loses a home is the first victim, but the neighborhood is a victim from having the vacant property, and the municipalities on this property that used to pay taxes now eats taxes. You got to send out the Police and the Fire and the Water Department, the Sanitation Department and the Building Department.
So what I'm hoping to work on is a dual effort, one that provides some more resources to the government, but also to do more about forestalling foreclosure, because people have noted we have another wave of foreclosures coming. People who took out conventional loans that were perfectly sensible and responsible and well documented when they took them out, but who are now encountering a degree and duration of unemployment that wasn't anticipated along with the drop in property values that keeps them from being able to refinance it.
So we are looking at a program that will provide some kind of temporary help to people whose problem is not just they can never pay that mortgage, but they can't pay it while they out of work and that is another area that we're working on that I've worked out with Mr. Cardoza.
That really is all I want to say. I have no questions. Usually you ask questions of people you disagree with. I don't disagree with you, so I've got nothing to ask you.
REP. SPENCER BACHUS (R-AL): I'm going to ask two questions but not because I disagree with anything you've said.
REP. FRANK: Well, you're better at being agreeable than me.
REP. BACHUS: (Laughing.) Mayor Jones, I found your testimony very compelling, and I thank you for coming to Washington to share your story and express the hardships your community is facing.
You mention you grew up in the south. My father was a contractor in Birmingham, Alabama, and one thing that -- when you hear the word Birmingham, Alabama, obviously that carries some connotations, but I'm proud of my father because he was the first -- one of the first contractors in Birmingham to step across the color line and hire black subcontractors, and his jobs were vandalized, but I can tell you that we've come a long way and -- in Birmingham, and we obviously as a country have come a long way, and I think last November was a testimony of that.
And I express (sic) you sharing your stories about the hardships of your community and it's nothing but a nightmare, I must say.
Is Los Banos -- is it Banos?
HON. JONES: Yes, Banos.
REP. BACHUS: Is that -- are they eligible to receive monies from the State CDBG Program, and you testified you have not received those yet?
HON. JONES: We are eligible. The problem came down with the CDBG funds. We have received funds. The problem with the Home Stabilization Program, whichever, had to be 15 percent below market value, where our property value has already fell 75 percent. So imagine 15 percent. That amount of money we could not use it. We would have to end up sending the money back to the states. For being the worst hit area in the complete country, we couldn't even use the money, which is mainly I think was meant to help.
REP. BACHUS: Yeah. Well, that's a shame and you know, as I said, I'd be glad to work with this committee and with your congressman.
Congressman Costa and Cardoza, I know you -- I appreciate both of you bringing this to our attention.
Mr. Johnson, you mentioned Alabama received 7 million (dollars) in stimulus.
MR. JOHNSON: Right.
REP. BACHUS: You mentioned that in your prepared remarks, but I think appropriately you responded, and I think in very good terms about what they may face.
What's the status of the money that Alabama is to receive? How much has been allocated?
MR. JOHNSON: We're -- we have received all the applications for the CDBG stimulus funds, and we're in the process of posting the preliminary awardees. There's a period that -- there's a public comment period, and then HUD will come back and either approve or disapprove the awardees.
REP. BACHUS: But --
MR. JOHNSON: We're getting them out as fast as we can.
REP. BACHUS: But it hasn't been distributed yet?
MR. JOHNSON: No.
REP. BACHUS: It's not out there doing --
MR. JOHNSON: No, sir.
REP. BACHUS: Okay.
MR. JOHNSON: No, sir.
REP. BACHUS: I'll yield any time I have left to Congressman Cardoza.
REP. FRANK: (Off mike.) We'll recognize our colleague from California now.
REP. DENNIS A. CARDOZA (D-CA): Well, I thank the gentleman --
REP. FRANK: (Off mike.) -- for five minutes.
REP. CARDOZA: I thank the Chairman, and I thank Mr. Bachus, and I think I can't embellish any greater on what Mayor Jones has said, and I think the words of Mr. Johnson are incredibly applicable.
When there is a national -- natural disaster and the whole premise behind the federal government acting is that state and local authorities don't have the resources to deal with the crisis, and so we expect that money not only to eventually get there, but to get there in a manner befitting the fact that this is a crisis and people need immediate help, and we have to have safeguards, and those safeguards have to be put in place quickly enough that the purpose for extending the funds doesn't get lost.
In the Neighborhood Stabilization Fund money, first of all Maxine -- Congresswoman Waters on this committee did a fabulous job trying to get those funds. They were important concepts, and the reality is Merced County, the hardest hit county as you've heard, is still to receive those dollars, and so there have been challenges.
We had -- we couldn't apply it directly because we weren't big enough, yet the -- and then the State's application was rejected initially and had to be reworked, and frankly the allocations to our state were less than other states of -- that had this issue, and the state action just got approved and the money is still -- the checks are still in the mail, and that is a year after this committee's work and intention to do this, and we can't let that happen if we do this program.
And I thank the testimony of Mr. Johnson. He's dead on.
And thank you Mr. Bachus for bringing him up here to do it.
REP. FRANK: The gentleman from California, Mr. McCarthy.
REP. KEVIN MCCARTHY (R-CA): Well, I thank the Chairman and I also want to thank Mr. Cardoza and Mr. Costa because, Mr. Mayor, I come just down the road from you. I represent Kern County, which we're all in the central valley together.
My district in Kern County has more than 15.9 percent unemployment as well, and what you talked about today is true. I was just on -- when I was flying back last weekend -- on the Yahoo page and they had up there the top ten cities that would recover the fastest and the top ten cities that would have the slowest recovery.
It was sad to see when you went to the lowest, they were all through the valley, and we know the challenges that we have in housing, and I appreciate Mr. Cardoza bringing this bill forward, but we also have other challenges as well, and some of them come with the environmental aspect when it especially comes to water. Knowing Los Banos and the breadbasket of America, people don't realize what this valley produces.
One, I'd like if you could touch a little upon the flexibility that this bill would allow and the challenge you have, but also let's allow this Congress to understand that this isn't our only challenge. We may get these houses back but we have to have people able to live in them that aren't double digit unemployment where there are cities with 40 percent unemployment, but the idea that there are certain restrictions which shut those pumps off from pumping water, not only does it hurt our valley, it will hurt our nation when it comes to feeding this nation and feeding the world, and we'll be more dependent on other places and the price will continue to rise.
But maybe as a mayor you can touch on where the food bank is at, where the number of lines are showing up, where these people want to work in your city, but because of man-made decisions we are not allowed to.
HON. JONES: Yes, our -- as I said, when you see the lines for the -- the homeless people. During the day I'm a teacher, and when I see the kids come to me crying because they are put out of their houses. Their parents cannot work. They are unemployed, and then as we realize it's because if there's no rain and there's no water and so they cannot plant crops.
That means these are the hardest -- some of the hardest working people in our complete nation. They are unemployed. Their kids are coming with no place to stay. Many of them are sleeping in cars with their families. That's how desperate the situation is.
And for water we had water march, which we marched, and we talked about how -- just how desperate the situation -- how bad we need water. The farming community is dying, and that is the hardworking people that are working that cannot get water, they cannot go to crops. The bad thing to look about this is eventually if we do not have a water master plan, if we cannot get water for the state to grow this food, well, our food have to come from other countries? Will that food come in contaminated? How long -- how far will we go before we make a decision that it's very important to have our food grown in America?
If you think foreign oil is expensive, try foreign food.
REP. MCCARTHY: Why thank you, Mr. Mayor, and I was just reading a headline where many of you know where California is financially, in one of the biggest deficits we've ever faced, and the challenges where we've had this special election, and we're going through that process, and the governor was recently in Fresno, another city within this valley and, he went to talk about this budget, and there were a number of mayors there and a number in the city and they said, "Stop talking about the budget. Talk about our number one problem, the water creation and lack of water deteriorating the valley. The reason we have the high unemployment. The reason we have the housing and others."
So, one, I want to applaud Mr. Cardoza for his work not only on this, but on the water issue as well, and Mr. Costa.
But, Mr. Mayor, I appreciate you continuing to help educate as you move this bill and work on it also.
For people to buy that house, we have to have water to grow the field, and it is a fundamental issue that throughout this valley for this Congress to know that lots of times when people think of California they think of San Francisco, Los Angeles, San Diego. They do not realize the value of what's within the central valley and how far behind we are and the statistic that show we will come out of this later than the rest of this nation, and a lot of this problem is done by man made. If we can handle labor when you talk to some environmental issues, we can put people before fish, it would go a long way.
I yield back.
REP. FRANK: The gentle woman from California.
REP. MAXINE WATERS (D-CA): Thank you very much, Mr. Chairman. I thank you for basically the way that you pay attention to the members and try and talk -- work through their problems no matter how difficult they may be. I really appreciate that.
And for our witnesses here today, I thank you for the time that you are given to deal with these what almost seem intractable issues in your area. I -- from California just met with a Bill Lawson (ph). We're on the telephone with John Burton (ph), and Roy Brown (ph) and some of the others, talking about what can we do to bring more people together to talk about how we're going to deal with this $25 billion budget.
We think that it is -- we know that it is an extremely difficult problem and it's going to impact these areas even more. The cutbacks that are being anticipated are just awesome and we're talking about two weeks out when we won't be able to pay the bills and the salaries, etc cetera, etc cetera.
So I'm particularly sympathetic to those areas who are in real economic disaster even before the negative impact of the budget is going to hit on those areas, and of course, the water problem has been mentioned here that it's been something that the valley has been concerned about for a long time, and the need to come up with a lot of policy in California that's going to serve the farm community, etc cetera, for all of these problems are very, very difficult.
You have a member of this legislature of this House who worked full-time at trying to come up with answers, and that's what this Economic Disaster Area Act is all about, a creative way to try and deal with problems that we have not been able to impact with all of the work that we have done.
We thought at one point that the Neighborhood Stabilization Act was going to be extremely helpful. We recognize the problem that you're confronted with with the size of the area that you're dealing with, and what we will do is continue to work with your member and do everything that we can to deal with, not only the foreclosure disaster, the unemployment, all of that that's confronting your area maybe in even harsher ways than it is in other areas.
So again, I see what the attempt is here. We understand it and the discussion about the use of CDBG, and I will work Mr. Cardoza to do everything that we possibly can to lend some help.
Let me just ask before my time is up.
Alabama. I remember that while a lot of attention was on New Orleans and Mississippi that Alabama was not being paid enough attention to.
How are things going? I mean, will you get your fair share of the CDBG money that --
MR. JOHNSON: I appreciate your asking that question, Representative Waters. We are still struggling. We still have a lot of folks -- hundreds of folks suffering in Alabama, and obviously most of the devastation happened in Mississippi and Louisiana, but I asked my staff right before I flew up here how much were we short still from getting everybody, not better than they were, but just back to even, you know, the low conditions they were in, and we're still short $100 million, and I would like to respectfully ask as you all move forward and consider, if it comes up in any way -- as I said I visited folks just recently, still folks living in FEMA trailers there, and any assistance, we would greatly appreciate. We surely would.
REP. MAXINE WATERS (D-CA): Mr. Chairman, I think that we need to probably go back to the Gulf Coast, we need to go back to Mississippi, Louisiana and Alabama and follow up on what has been done and the money that we allocated, how it's been used, and that money that didn't get there yet. I think there may be still some resources that are, as you say, you know they are due to you, but we need to see what we can do to --
REP. BARNY FRANK (D-MA): You know, you and I said this and I think we've talked about it with members on the other side of the aisle as well. There isn't any reason why FEMA should still be in the housing business years after a disaster. They're an emergency entity. HUD has the housing jurisdiction. And I've spoken with the chairman of the committee on Homeland Security, Mr. Thompson, the chairman of security, the chairman of the committee on transportation, Mr. Oberstar.
We need to reallocate this so that at some point after an emergency, the housing agencies (come in ?). And part of the problem has been there aren't clear lines of authority there. At this point, we have no questions here. The gentleman from North Carolina has just announced, within ten or fifteen minutes, we will have four votes on impeachment, and I do not think it would be reasonable to expect people to come back after that. So, we'll have a chance to do another 15 or 20 minutes of questions, and that will probably end the hearing.
The gentleman from North Carolina.
REP. : Thank you, Mr. Chairman.
I won't take my entire five minutes. I just want to compliment Mr. Cardoza and Mr. Costa for bringing this matter before us and express appreciation to the chairman for convening the hearing and accommodating the members who obviously are in distress and whose districts are in distress, not that all of our districts are not in distress, but there are relative degrees of distress.
The one question I had, Mayor Jones, was I heard Representative Cardoza say that the community stabilization money is finally coming through or have wound their way through the process. What was the amount of those and will those be able to be used to address any of the water concerns that have been raised here? How are you planning to use those?
MR. JONES: Well, first of all, the amount for the Neighborhood Stabilization Program was $2.4 million, but the problem was, it had to be 15 percent below market rate, and our values have lost so much, we find it almost impossible to use, and we will have to return the money, and we're probably the worst hit community in the complete nation, and we will not even be able to use the funds with those rules.
REP. : You mean, it was designated, I'm not sure I understand --
MR. JONES: Yes.
REP. : Why you wouldn't be able to use it.
MR. JONES: Because a stipulation was put on by the state that it had to only go to purchase homes that were 15 to 18 below market value.
REP. : Oh, okay.
MR. JONES: Our houses have fell more than 70 percent in value already.
REP. : Okay, so that was a state stipulation. Okay. How, what, how would you address this water issue? I guess that would be the other. Maybe I should be addressing that to Mr. Cardoza, whether there might be ways that we could work with him to pursue that. Because it sounds like that might be a longer term solution to really create jobs and create employment, whereas CDBG money might not serve that long term purpose. It would serve a purpose. No question about that.
REP. : What Mr. McCarthy is --
REP. : I'll yield to the gentleman.
REP. : Thank you. With the Chairman's ability for having me take the yield here. Mr. McCarthy has mentioned that there are a number of things that we're working through, and we need to a dialogue to deal with it. We're working with Secretary Salazar. We're hopeful on those fronts. And yesterday, on the Floor, we were attempting to deal with it one way.
There's other ways we can work it, and we will pursue every avenue. I think the reality, though, and the reason why we propose the CDBG issue today, is that without additional water, without court intervention, we're dealing with legal ramifications of federal law. Without many different changes and without some direct assistance, there will be no way for us to get off the ground. Mr. McCarthy is absolutely right. The new projections show us returning back to normal years after the rest of the country gets back on its feet.
REP. : Well, I'll certainly continue to work with your representatives, Mayor Jones, and be as supportive as I possibly can. We've been hit pretty hard in North Carolina, too, so I can, and I've got some rural parts in my Congressional district that are suffering, but I'm not sure to the extent that you've described today.
So, Mr. Chairman, I yield back now.
REP. FRANK: Thank you. With the indulgence of the other members, the gentleman from Michigan has been here from the start, and if there is another area of the country that's take a very big hit, it is Michigan.
So with the members' indulgence, I'm going to recognize our colleague from Michigan, Mr. Peters, for five minutes.
REP. GARY PETERS (D-MI): Thank you, Mr. Chairman.
I appreciate you yielding the time and I'd like to thank both Mayor Jones and Director Johnson for your testimony here today, and particularly thank Congressman Cardoza for your work on this bill. I can't agree with you more that for many communities, communities that I represent as well in Michigan, the effect of this economic crisis is indeed just as disastrous as a flood or a hurricane.
Michigan has had one of the highest foreclosure rates in the country for years now. It's not a recent phenomenon, but for many years, and the rate of foreclosure in the Detroit metropolitan area has been consistently in the top ten in the nation. However, unlike some other areas where the foreclosure rate is due primarily to a burst in the housing bubble or steep increases in housing prices, the foreclosure problem in Michigan has been primarily caused by very high levels of unemployment.
From May of 2008, to May of 2009, the state of Michigan has lost more than 300,000 jobs and the unemployment rate now for the entire state is at 14.1 percent, the highest in the nation. University of Michigan economists have predicted that in Oakland County, which I represent, it's going to lose another 25,000 jobs this year. In fact, about three weeks ago, I had the announcement from General Motors that three plants are being closed in my district, 7,000 jobs just in those three plants, not including the auto suppliers and all the other jobs.
So I know that this committee and the Obama Administration has come up with a number of very important housing programs to help homeowners that are facing foreclosure because of housing price declines, but I'm worried that not enough is being done to help communities and families that are affected by the foreclosure crisis in places like Michigan, where the biggest contributing factor is not sub-prime mortgages or balloons coming due, but simply a lack of jobs. And so, that's why I'm certainly very supportive of the efforts of this bill and Mr. Cardoza'z efforts to target more government assistance to those areas that need it most.
I do have some question about the formula, if I could have Mr. Cardoza's attention, please. The formula in this bill is that, while most Congressional districts in Michigan would like qualify under the criteria that you've chosen, there are other districts in Midwestern states, like Ohio, Indiana and Illinois, that may not benefit, despite the fact that they've also been impacted a great deal as a result of dislocation in this economy and rising unemployment rates. They've lost jobs and foreclosure rates are in the top ten.
Is there any effort to refine some of those criteria, and certainly I would like to work very closely with your office in refining some of the criteria to make sure areas in the Midwest, like Michigan, that may have had a longer experience of decline in housing prices, and have a steep drop, but nevertheless are suffering a great deal would qualify?
MR. CARDOZA: If the Chairman would let me respond?
REP. FRANK: Absolutely.
MR. CARDOZA: I totally agree with the gentleman and my purpose today, we purposely labeled a discussion graph because frankly, we don't know the best way to do this. We want to include the communities that need to be included. Certainly, we don't want this to become a grab bag, but we want it to be focused on the areas that are most in distress, and yet we wanted to get to those. Because I don't want other areas to be like ours, that they're waiting for three years to get the recognition.
And so we have not come up with the perfect method to allocate the dollars and we really need that. We had to put something in the bill to start the discussion, but I'm going to leave it to the Chairman and this committee to figure that out, because these are tough challenges and money is finite around here. So I thank the gentleman for his question.
REP. PETERS: Thank you for the response. I look forward to working with you and Mr. Chairman as we refine some of the criteria. I appreciate the --
REP. FRANK: Thank you.
The gentleman from California, it was his idea, if we all have a lot of ongoing responsibilities. Our staff was glad to work with him and this just needs some -- (inaudible). We will need a decision at some point, from somebody as to what resources are available and then once we know that, we'll try to divide them up. I've said and I've mentioned this to others, one potential source for some help here, we are getting TARP funds repaid at a faster rate and in more dollars than we thought.
We are getting a profit on the TARP funds to some extent, from interest and dividends, and I am exploring what we might do to deal with that. And I think there's some economic justice in taking the money that originally went to keep the banks functioning, in dealing with some of the problems that the banks caused.
The gentleman from Kansas. Let me just say, at this point, I think we'll be able to accommodate our other three members before the votes start and we'll try to do that if everybody sticks to five minutes. The gentleman from Kansas.
REP. DENNIS MOORE (D-KS): Thank you, Mr. Chairman.
I'll be very brief, and I apologize to the Chair and the members of the committee and the witnesses for being tardy in getting here, but I have read the statements of the witnesses and I certainly would agree with my colleague who talked about not only the situation we're facing in our country but in California, Alabama and Michigan. There has certainly been a disproportionate share of suffering there, as a result of some of what's happened.
And I will just say that I want to work with my colleagues, too, to make sure that the people that have suffered mightily receive some additional help, because the unemployment rates, the foreclosure rates that you all have talked about is something that is not sustainable. So we need to make sure that we take care of the people who've suffered the very worst, and in our whole country, but the people, additional help for those folks who have suffered the worst.
And I'm going to, Mr. Chairman, with your permission, yield back my time to the other members who were here and heard the testimony of the witnesses, so they can --
REP. FRANK: I thank the gentleman.
The gentleman from Texas, and then we'll get to the gentle woman from Ohio.
REP. : Thank you, Mr. Chairman.
I will probably yield back time as well. I want to apologize for my late arrival. I've been in Homeland Security and we've had a markup all day today. I support the concept of economic disaster area. I think that it provides us enough of an opportunity to focus on given areas of the country that are in dire straits. There may be some things that we need to do to tweak it, but the concept seems to be petty sound.
We know that there are people who need help. This becomes a vehicle by which we can afford to help that's needed, so if we need to tweak it, I say let's tweak it, but I don't think we should abandon the concept. And I yield back the balance of my time.
REP. FRANK: The gentle woman from Ohio.
REP. MARY JO KILROY (D-OH): Thank you Mr. Chairman.
And thank you, Mr. Cardoza, for putting this issue before us. I also want to thank the witnesses for taking your time to travel here to present the information to let those of us from other parts of the country understand what's going on in your world. I am from Ohio, and like the gentleman from Michigan, Ohio also has experienced a decline, but unlike, maybe different from the sun coast or the central coast, not caused by a hurricane, not caused by boom or bust, but really a longer and slower, but nevertheless very significant decline.
A decline in jobs from the steel industry, from a number of years back, now it's being hit hard with the auto industry.
And frankly, a migration in many instances, of people leaving the state in search of other opportunities. High unemployment rates, and in my community, an extremely high rate of foreclosure. Communities like Cuyahoga County, which seats Cleveland, home prices are incredibly low and foreclosed properties are bringing down that, we're in that concentric circle problem that the Chairman described.
So I am glad that we are thinking about this and trying to think about what's the best vehicle is to provide help to the communities that need it, and I'm glad that you've helped me understand what is going on in your community. I yield back.
REP. FRANK: I thank all the members.
I want to say that we are taking this seriously. We have a money problem and that's why I mentioned taxes before. The problem we have is, there are a lot of good reasons to spend some of the money to make people -- (inaudible) -- which was first expressed to me 40 years ago from an older politician in Boston who was surprised at my naivety at what I thought was an inconsistency, and he said, "Hey, kid, ain't you heard the news? Everybody wants to go to heaven but nobody wants to die."
Spending the money is going to heaven. Finding it is dying. But we are going to make a serious effort to get this. There's TARP money, there are other sources of funds. The gentleman from Alabama correctly pointed out, we are talking about something of limited duration, so my sense would be, it is certainly the hope, and there are problems with those parts of the country that may get it slower, but that by the end of 2010, we should be looking back on this.
So we are probably talking about something of a duration of less than two years, and as I said, has two components. It has aid to those areas of government that have a problem, and there aid to the individuals in the foreclosure, as Mr. Peters and others have mentioned. We will try. We will be working on trying to see if there's an allocation we can work with.
Mr. Cardoza and others have taken the initiative. The gentleman from Alabama was being very forthcoming in his bipartisanship here, and I think we'll have a sincere effort. And let me just say this to you, that I counted up 15 members who were out. It's Friday afternoon, we have other things to do, but I would tell both witnesses, you have not wasted your time for being here. And there are staff members here as well.
You have made an impact and I promise you that there will be some serious follow up. With that, we're going to -- yes, the gentleman from Alabama.
REP. SPENCER BACHUS (R-AL): I'd like to make two points. One is that as we do this, if as we expand that definition or the criteria and make it more inclusive, it actually, you diffuse it more and so, sometimes, I think it's more practical to concentrate on --
REP. FRANK: Would the gentleman yield? It takes some restraint. Nobody in America is dancing these days about the economy, but I think it's incumbent upon some of us to recognize that some places have been hit much harder than others, and hold back and defer.
REP. BACHUS: Particularly when you have, as in this situation, you have a whole valley and it's a drought and it's a series of things. And second, I'll say, I think this is somewhat analogous to when you all were on TV and we saw New Orleans and what was happening, and we thought, my gosh, you know, that can't happen here. In this, unfortunately for you, the TV cameras were not trying there ever to, and I think if they were, people would be demanding a solution.
REP. FRANK: With that, the hearing is adjourned. (Sounds gavel)