This week the House considered H.R. 2397, the Defense Department Appropriations bill. While it does contain a number of important provisions, I could not support H.R. 2397. The legislation provides more funding for the Department of Defense than called for under the Budget Control Act. This means steeper cuts in other appropriations bills that fund education, health care and scientific research without an agreement to implement a balanced approach to managing federal spending. The Obama Administration has already stated that H.R. 2397 will be vetoed.
I supported an amendment that would have prohibited the NSA from using section 215 of the Patriot Act to collect records from individuals who are not under investigation. As you know, I am very concerned about the blanket collection of data from all of us, which we now know has been occurring. Unfortunately the amendment did not pass. I voted NO.
The House also considered H.R. 2218: the Coal Ash Deregulation Act. This legislation prevents the Environmental Protection Agency (EPA) from regulating coal ash. Instead, it leaves that responsibility to the states. In other instances when the EPA leaves regulation to states, it establishes minimum standards that must be met. That is not the case here. Currently, the EPA requires states to address issues of groundwater contamination, site cleanup and safe coal ash disposal. Under H.R. 2218, those requirements disappear and states are left to develop regulations on their own. Without minimum standards, the EPA will not have the authority to review state programs and would have limited authority to clean up contaminated sites. I voted NO.
Attempts to End the 30-Year Mortgage
This week the House Committee on Financial Services passed H.R. 2767, legislation that would eliminate Fannie Mae and Freddie Mac within 5 years and eviscerate the Federal Housing Administration (FHA). This will effectively remove any federal government guarantee from the secondary mortgage market. All committee Democrats, as well as two Republicans, voted against the bill. The practical effect of doing away with Fannie Mae and Freddie Mac and not replacing it with any meaningful entity will result in the end of the 30-year, fixed-rate mortgage that so many middle class families rely on to achieve home ownership. While lenders would still be able to provide mortgages without a government guarantee, they would not be affordable to the vast majority of Americans. This will mean much higher down payment requirements and higher interest rates, putting home ownership out of reach for too many families. The legislation also eliminates the Housing Trust Fund, which, when funded, is used for affordable rental housing.
I strongly agree that Fannie Mae and Freddie Mac must be reformed and that the private sector should play a larger role in the housing finance market. But eliminating Fannie and Freddie and leaving this solely to the private sector is not the answer. Realtors, homebuilders, consumer groups and community and mortgage bankers have all expressed opposition to H.R. 2767. I certainly hope that H.R. 2767 does not pass the full House. As ranking member on the Housing and Insurance Subcommittee, I will continue working with my colleagues on both sides of the aisle to preserve the 30-year, fixed-rate mortgage and work towards commonsense reform.
Over the last several years there has been much discussion about the Troubled Asset Relief Program (TARP) -- better known as "the Bailout". TARP made more than $450 billion available to banks, automakers and others as part of efforts to stabilize the economy during the 2008 financial crisis. Have you ever wondered whatever happened to all that money? Most of the answers can be found here.
As you can see, 95% of the money lent out by the federal government (your tax dollars) has been returned. AIG, the insurance company that intentionally made bad bets internationally to make money, received $67.8 billion in taxpayer funds. So far, AIG has returned $72.9 billion -- that's a $5.1 billion profit (about 7.5%). For this investment, most neutral economists believe the world economy was saved from an even greater disaster.
The bank bailouts were even more profitable. The federal government loaned $245.1 billion and has gotten back $271 billion so far. That is a $25.9 billion profit (10.5%), and more money is due back to taxpayers.
Auto manufacturers received $79.7 billion and have so far repaid $50.2 billion. The federal government also owns a lot of their outstanding stock. Hundreds of thousands of American auto industry jobs (manufacturers, suppliers, and dealers) all across the country were saved as a result of this bailout.
Let's also look at the loans made to Fannie Mae and Freddie Mac. These agencies fund about 90% of the home mortgages in America. The federal government loaned them $187 Billion and, so far, they've returned $132 billion, with much more to come. These efforts stabilized the housing market for millions of American buyers, sellers, builders and suppliers. The latest update on Fannie Mae and Freddie Mac's borrowing and payments can be found here.
All this investment was painful and risky and we are not out of the woods yet. I do think, however, that the numbers highlighted above prove that doing nothing would have been worse than taking bold action. Many commentators on the extreme right-wing would have you believe otherwise. They still argue that the federal government should have let our financial institutions, our auto manufacturers, and our housing industry collapse into bankruptcy and they do seem to have the loudest bullhorn.
Numbers and facts speak louder than even the largest bullhorn (at least I certainly hope they do). Doing something is almost always better than cringing in a corner, afraid to act decisively. Together, we saved the world economy and we should celebrate that achievement while at the same time remain vigilant.
What's Up Next
Next votes are scheduled for Tuesday July 30th. The House is expected to consider H.R. 2610, the Transportation, Housing and Urban Development and Related Agencies Appropriations Act.
Congressman Mike Capuano
7th District, Massachusetts
Committee on Transportation and Infrastructure
Committee on Financial Services