Press Conference with Sens. Harry Reid (D-NV); Charles Schumer (D-NY); Patty Murray (D-WA); Jack Reed (D-RI) on FHA Modernization Act
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SEN REID: Thank you all very much for being here, this bright afternoon, with these lights.
Senator Durbin's going to speak when I finish, Senator Schumer, Senator Murray, Senator Reed, and then we'll have some questions and some answers.
I was just on the floor of the Senate, and asked consent that we be allowed to proceed and vote and pass the FHA Modernization Act -- extremely important legislation, passed the House, came out of the committee over here on a bipartisan partisan basis, passed 20 to 1 out of the committee.
I really don't know what objections there could be to this. We have a crisis that is there. It's not under the surface anymore; it's out in the open. I had the good fortunes this week to be able to talk to Bob Rubin, former secretary of Treasury. I also talked to the present secretary of Treasury, Paulson. And both of those men acknowledge the problems we have with this subprime mortgage issue.
I was on the telephone talking to Paulson. It was about 11:00, 11:30 in the morning. I said, "I wonder what's happening with the stock market," and I flipped on -- I was watching the Senate and I flipped to another channel; it has the stock quotes.l And I said, "Man, that's gone up almost 200 points. How could it be with all the bad news?" He says, "The equity markets don't understand what's going on."
And that -- well, that's true. It is just a real problem that we have in America today with the subprime mortgage problem. It's really a crisis now, it's not a problem. It's impacting hundreds of thousands of Americans, and we need to respond to this. That's what the FHA initiative was this afternoon.
Nevada alone has seen the number of foreclosures more than double, and one out of every 165 Nevada households is facing a foreclosure. We've continued as Democrats to work on the items we identified as important first steps for the Congress to address this crisis: modernizing FHA, so, so important; securing funding for foreclosure prevention counseling, so important. What does the president and his administration do at this time of crisis for these nonprofit counseling entities? Cuts back on the funding. I'm not making that up. He did it. It's really too bad.
And we need to provide the tools to keep mortgage markets functioning. We have secured 200 million (dollars) in funding. This was done with the good work of the chairman of the subcommittee on transportation appropriations.
Two hundred million dollars in funding foreclosure prevention counseling. That money is provided to allow people to not have to go into foreclosure. We have found that if people have the opportunity to find out where they are and to talk to people that know what they're talking about, and not to someone trying to force them into a teaser loan, that some good work can be done and save the homeowner, the borrower, and the entity where the home is built.
The president has threatened to veto everything that we've tried to do -- and that's unfortunate -- including the bill that Senator Murray has put forward.
Early in the fall, we asked the administration to give Fannie and Freddie, whose mission is to promote homeownership and help the mortgage market function, added flexibility. We asked as that time, "Mr. President, do this administratively." No response.
Senator Schumer's Promise Act seeks to provide Fannie and Freddie with flexibility so they can facilitate refinancing for U.S. homeowners on the brink of foreclosure and stabilize the mortgage markets.
While these are crucial immediate first steps, Democrats will continue exploring other ways to address this problem. Some of these ideas include Senator Durbin's bill to help families in bankruptcy -- the House, we think, is going to vote on that today; Senator Stabenow's tax relief program, which is really a smooth piece of legislation, which will make it easier for homeowners and lenders to renegotiate loans and to hold homeowners free of the awfulness of a foreclosure; Senator Jack Reed's bill, requiring lenders to consider options before closing, are also important. We're here to talk about these and other issues relating to this crisis we now find ourselves in.
Senator Durbin.
SEN. DURBIN: For over 2 million Americans that run the risk of losing their homes, who can think of a worse economic tragedy that might strike a family? But unfortunately, for America, that is not the end of the tragedy.
The Center for Responsible Lending just put out a release about the impact of these foreclosures on surrounding communities. The numbers are amazing. Forty-four-point-five million families will experience a loss in the value of their homes because of foreclosures in their neighborhoods -- 44.5 million families; that represents one- third of all of the residential homes in America. This just isn't the misfortune of 2 million families who are in subprime mortgages and other mortgages, this is a misfortune for homeowners all across the United States.
And my home state of Illinois will be the fourth-worst-hit state in the country. Cook County, our largest county, will be the second- most damaged county in America. Over 2 million people living in Cook County in the state of Illinois will lose value in their home because of neighborhood foreclosures.
These homeowners will lose over $15.7 billion in home value.
This administration likes to talk a lot about tax cuts. They are cutting the value of people's homes by failing to respond to this crisis.
If I had a message to the president, it's very simple. Just outside Iraq is a place called America, and America needs your help too, Mr. Commander in Chief. Any other president at this point would be calling a summit with all of the leaders in Congress and the secretary of the Treasury to say, "How can we stop this crisis?" We have legislation that will do it, strong bipartisan legislation that will start moving in the right direction where the president can use his power of leadership.
I have a bill on foreclosure and bankruptcy, which says if you're forced into bankruptcy, if you stand to lose your home, there's one last chance to renegotiate that mortgage down to fair-market value and let you stay in your home. That, to me, is the right outcome, to give people that chance to remain in their homes. We need this president to really rally the leadership of his administration and Congress immediately -- immediately -- because this devastation to our economy is going to be felt for a long time to come.
SEN. SCHUMER: Well, thank you.
And I want to thank all of my colleagues. As you can see, this has been an effort on the part of many of us. And let me just say a couple of things in addition to what Harry and Dick said.
Why aren't we moving here? It's because the administration has ideological handcuffs on itself. That's what blocks us. You talk to every expert -- I talk to all the people in the mortgage industry, I talk to the banks -- you talk to people in the Treasury Department, they will tell you we know we should do the things we're outlining. They don't do them because the president is really back in the 1890s -- no government help, live by the capitalist, die by the capitalist sword.
We've learned since then. We've learned that people are duped and need protection. We've learned that problems in small places ripple out. That's what's happening here. As Dick mentioned, here is what the studies show: that if you live in a neighborhood where two homes are foreclosed, your property values will go down 1 percent -- your property values. So if you have fully paid your mortgage, if you have never missed a payment in your life, you're being hurt by this subprime crisis.
And then it hurts the economy at large. The studies show when your property values go down, you spend less. We're approaching the Christmas season.
Consumer spending is the engine. People are going to spend less. And the tragedy of this is none of it had to happen.
And let me quickly explain just generically what we need. People are -- about half the people foreclosed on are prime borrowers. They could easily refinance. But here's what they don't have: they don't have somebody on the ground to help them refinance. We wouldn't know how to refinance our homes on our own. And in the old days, the bank was there. The bank's gone. There's no bank in this. Most of the subprime mortgages are put out by non-bank mortgage companies and scurrilous mortgage brokers who took advantage of people. And so the nonprofits can come in and in a very quick and easy way help people refinance. And that's why Bob Casey and Sherrod Brown and I asked Patty Murray to put $100 million in her bill, and then Chris Dodd and Kit Bond asked for another 100 million (dollars) a little bit later, and we have $200 million which will save hundreds of thousands of homes from foreclosure.
The second thing you need is money. Who has money in housing? Hello? Fannie Mae and Freddie Mac. That's what they were built for. That's what they should be. Everyone thinks they should be. Our proposal, the Promise Act -- Barney Frank has it in the House, I have it here in the Senate -- would provide that money simply, easily, quickly. They say no, no government help. So because of these narrow ideological blinders, even Secretary Paulson -- I'll say this; he won't -- but I know when I talk to him -- I talk to him every day -- he knows better. He knows we should do this. If he were the head of Goldman Sachs still, he'd be recommending we do these things.
But this administration has ideological blinders. It's hurting the 2 million Americans who are going into foreclosure. It's hurting the 40 million Americans who live in their neighborhoods. And it's helping (sic) the 300 million Americans who want to see the economy grow. And we're doing nothing. That's why we're moving on the floor and we'll keep moving until we get some things like this done.
SEN. MURRAY: I think all of us are more and more aware of the number of families that are really stressed in our country today. It's the rising gas prices, it's health care costs, it's pensions they're worried about. And now they are frightened about the most basic thing they have, which is their home. Can't send your kids to school if you don't have a place for them to sleep at night. You can't go get a job if you don't have a home where someone can call you and offer you a job.
This is about security. I've been talking about the housing crisis for a long time as a silent epidemic. Well, we are no longer silent.
It is very clear, and families across this country are realizing the impact of it.
It is deeply troubling to me that the Republicans have objected to moving forward on this critical legislation today as we go into this holiday season. In my transportation appropriations bill, as you heard, we put in $200 million for counseling services to go to the nonprofits around the country because they are being inundated with these families who are trying to figure out how to deal with the personal impacts of this. That money goes for educational services, for foreclosure counseling, for outreach in the community to find these families to give them the best help and support as they go through this. We are told that, combined with the nonprofits, this will reach almost a million of those families who are struggling today.
In our bill, we also have critical funding for CDBG grants. These are grants in every single community across the country that help to build affordable housing with those dollars -- we have $3.7 billion, and remember, the president cut that dramatically in his budget. We have 375 -- or 735 million (dollars) for housing for the low-income elderly. The president sent us a budget that cut that in half. We have 237 million (dollars) for housing for the disabled. The president's budget cut that in half.
We have one more step to get this transportation bill to the president, that's passage in the Senate. And when it gets to his desk, I hope that he realizes that his favorite four-letter word of veto will have a huge impact on families in crisis across this country. It means that the counseling services won't be there, it means CDBG funding, housing for our seniors, housing for disabled, basic structural functions that every American family needs are at risk with his veto pen.
So we as Democrats are going to continue to push forward to do everything we can to address this crisis, but we need a partner across the aisle and we need a partner across this capital in the White House to help us get there. And we urge the president to wake up and listen. Thank you.
SEN. REED: We're in the midst of a financial crisis. It began with the subprime mortgage crisis, but that has rapidly spilled over into many other financial fields.
It is noteworthy to point out that just this week a pension fund in a state discovered that what they thought were AAA securities are not AAA, and have to be down-valued. A major bank has injected significant money into their mutual fund because this fund holds paper which is not the value they thought it was. So this is a major crisis.
But the first casualties of this crisis were homeowners. And I believe, and my colleagues believe, we have an affirmative obligation to help these individuals.
Legislation I've proposed along with many of many of my colleagues would require that lenders and servicers engage in reasonable loss mitigation prior to foreclosure.
We don't want foreclosure to be the first option; we want it to be the last resort. And we believe that lenders/servicers should do this.
We also want to provide an infrastructure to support the appropriations that Senator Murray obtained in her bill which would provide, throughout the nation, counseling centers so that individuals could come and get answers to their questions. I know the industry, and with some sincerity, talks about they don't want to see foreclosures, they don't want to see these people in distress. But when you get a call and you're months in arrears on your mortgage from your servicer, there's a tendency that you might not take that call. But if there are centers, if there are places where they can go and feel that they can get help, we might encourage a very proactive interchange between servicers, lenders, and families in danger of losing their homes.
In order to prevent this in the future, we also want better disclosure in terms of mortgage documentation. Like many on this dais, I went to law school. I've been to closing. I don't even attempt to read the seven inches of paperwork that's piled up on the desk. And this has to be provided information in a way that people can understand just exactly where they'll be in a year or two years in terms of the monthly payments. We want that also to have to take place.
But this point that Senator Durbin made in particular, and echoed by my colleagues, is the administration has to take this seriously, Secretary Paulson and the president. This is a crisis. They have to not just convene a brief meeting and get some photos; they have to bring us all together, work together to provide relief so many homeowners across this country.
There have been some proposals. One in particular by Sheila Bair, who's the head of the FDIC, to set these exotic mortgage rates not at their current rate, but back to the initial teaser rate and allow people to stay in their homes. There are ideas like that that have to be invoked, studied and implemented, and that will only take place by aggressive leadership by the president and by others.
I think going forward our regulators have to be much more sensitive to the mortgage industry. They have to provide guidelines that will prevent this situation in the future. But at this moment, to avoid further deterioration and further pain for the families in this country, we have to step up, pass this legislation, work with the White House, get it done, and help keep people in their homes.
SEN. REID: All right. Do you have questions? Yeah?
Q Senator Reid, as the Banking Committee chairman's been traveling so much this year, has that had any effect on -- (off mike) -- committee's mortgage reform bill?
SEN. REID: I'll tell you one thing, he's where he should be today; he's in Nevada. (Laughter.)
Q (Off mike.)
SEN. REID: Well, we have two Banking Committee members here. Remember, the Banking Committee has always been a bipartisan committee. The jurisdictional framework of the Banking Committee takes at very complex issues. Nothing happens very quickly.
And I'm not about to criticize Chairman Dodd for not being here today or any work that's been done in that committee. There have been hearings that he's delegated to people to conduct the hearings. So Dodd has been involved with what the committee has done, and I think he has done a good job on the committee.
Yes?
Q On the FHA modernization bill, when will it come to a vote? (Off mike.)
SEN. REID: Well, I tried to get a vote on it right now and the Republicans objected to it, as they do most everything. But on this, it is real hard to fathom why they would do that.
As I indicated, it passed the House with a significantly strong number. It came out of our Banking Committee by a vote 20 to 1. But yet, today, they objected.
Yes?
Q You talked about the Stabenow tax proposal. That has bipartisan support and the president said back in August he wanted it passed. What are the chances of getting a vote on that this year? It's already passed the House.
SEN. REID: I guess you're under the impression that you take for what he says as something that he really is going to do.
We have been working very hard. Senator Stabenow is really good at what she does and she is very persistent, and she's gotten no help from the administration other than a pat on the back when she went to the White House once.
We're ready to move on this. We're waiting for anyone from the administration to say, "We'll help you with this," as we have these other things. What she's talking about is so common sense, so why don't we change the tax code so that people aren't punished if they decide they're going to get a new loan rate on their mortgage? But we've gotten no help from the administration. None.
Q Do you need the administration to convince enough Republicans to get to 60? Is that the problem?
SEN. REID: Yeah, or at least give us some indication they'll work with us. We have not had that.
Yes.
Q What's the plan for moving the transportation/HUD conference report?
SEN. REID: I had a conversation with the chairman of that committee -- subcommittee this morning. We're anxious to move forward on it. It is a real good bill. Things that are in that bill are so badly needed, infrastructure.
Nevada's no different than the other 49 states. We have tremendous needs for that bill. We're waiting to see if they will let us do it. The conference has been completed. We'd do it in 10 minutes on the Senate floor. But as of an hour ago, they wouldn't let us do it.
Q Do you know why?
SEN. REID: I don't think they want any successes. That's a success, to go through that complicated bill, to pass it in both bodies, to finish it totally, a transparent conference. I just don't think the president wants the bill, and so he tells his Republicans here not to let them do it, and they don't do it.
Yes?
Q (What's with the Chafee bill on ?) -- (off mike)?
SEN. REID: I'm sorry?
Q Why -- (off mike).
SEN. REID: Chuck? It's Senator Schumer's bill.
SEN. SCHUMER: Yeah, because one of the problems there is that we do usually work in a bipartisan way, but Senator Shelby has not been for that bill, the administration has not been for that bill.
And rather than have it be delayed in committee, I asked Leader Reid -- I said, "We got to move this quickly because this is a crisis, and every month you wait there are more homes foreclosed." And that's why we did it.
SEN. REID: One last question.
Q Senator Reid --
Q Senator Reid, on Iraq --
SEN. REID: Two last questions. Okay.
Q How does Senator McConnell's cloture motion on a clean supplemental affect your strategy? And how would a Sunday vote in particular achieve the goal of showing that Republicans are filibustering an Iraq policy change?
SEN. REID: Well, it appears now, from the last information I got from floor staff, what we're looking toward is having a vote, of course, on the farm bill, cloturing that. That probably will be our last vote, and then it appears we'll have a number of -- two votes on a Iraq. One is to do what the Republicans want to do, and that is give the president $70 billion just to add to the 470 billion (dollars) he got last -- a couple days ago with no strings whatsoever attached to it.
We feel, and -- our legislation we're going to ask to proceed to is one that has some accountability for the president. After having run this company -- country into the ground with $800 billion -- just the direct costs -- of this war, doesn't it seem that the money that we give the president should have a few accountability provisions in it? And we do. And we'll virtually get every Democrat to vote for this. There may be one or two not going for it, but I think we'll all vote for it. It's something that certainly needs to be done.
Q Senator Reid, how is those votes going to be structured? When are you going to vote on them?
SEN. REID: Hopefully in the morning.
Q Senator Reid, if you don't get -- it's not likely that you'll get 60 on either of these bills. Is it -- are you comfortable leaving for the year without providing any emergency funding for the war?
SEN. REID: I feel pretty comfortable when, just 48 hours ago, the president got $470 billion. I think he should be able to do okay on that for a few months. And we've been told by the people in charge in one of our meetings we had yesterday that the Marines can go until sometime in March and the Army can go until late in February, and those are very conservative figures. I am confident, if they didn't get another penny, they could go for another six months.
But I know there will be shouts and cries that we need more money in Iraq. But as Senator Durbin said, the American people are wondering where the money for America is. On the same day he signed the $470 billion appropriation bill for more money for the military, he vetoed a bill that he thought was a few billion dollars more than what the American people need.
So I'm just speaking for myself. We've done everything we can and more to support the troops. We are -- we are going to continue to do that. But $470 billion as of 48 hours ago should give them a little bit of a checkbook they can deal with for awhile.