NEW DIRECTION FOR ENERGY INDEPENDENCE, NATIONAL SECURITY, AND CONSUMER PROTECTION ACT AND THE RENEWABLE ENERGY AND ENERGY CONSERVATION TAX ACT OF 2007--MOTION TO PROCEED -- (Senate - February 28, 2008)
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Mr. SALAZAR. Mr. President, I come to the floor of the Senate this evening to express my extreme disappointment that the Senate is not moving forward today to address the housing crisis which is causing so much pain for people all over this country, from the Presiding Officer's wonderful Sunshine State of Florida, to the western shores of California, to most of the States across the country.
We know there is a lot of pain because of the housing crisis that America finds itself in today. To be sure, I am proud of the work that this Chamber did a few weeks ago when we pushed through the economic stimulus package to provide tax rebates and to provide some incentives for businesses to invest in equipment to make sure that we are keeping our economy from going into the ditch.
But let there be no doubt, let there be no doubt anywhere in America today that the housing market is in crisis and American home ownership is becoming a nightmare to the homeowners of America. And so it is, in my view, incumbent upon this Chamber, incumbent upon the President of the United States, incumbent upon us, to try to move forward, to try to ease some of the pain and to make sure that what is the primary cause for us being in the kind of economic instability that we find ourselves in today, is something that we address, and that is the housing crisis that America faces.
On this chart, you will note that the statistics indicate what is happening across America that is bringing so much pain to the people who own homes in all of our States. This morning in one of our Finance Committee meetings where we had a hearing, we heard from the real estate industry, including those who are owners of commercial real estate and those who build our homes across this country. Those who are building our homes, the National Association of Home Builders, their vice president and a witness today at our Finance Committee hearing said what they are seeing in the housing market is the worst they have seen since the Great Depression.
Now, the Great Depression brought not only the economy of the United States, but the economy of the world, basically, to its knees, flat on its face. And it took that ``greatest generation'' to stand up this economy again.
So they are telling us, these people who build our homes in America, that this is worse than anything that they have seen since that Great Depression. But Moody's, the economic group, in testimony that they provided to one of our committees in the Senate not long ago, talked about how we have not yet reached the trough, the bottom of the housing crisis that we are going into. Yet we have a filibuster underway that is keeping us from moving forward and addressing this housing issue.
I do not get it. I do not understand it. If you look at where we are today in terms of what is projected to be the trough with respect to a number of these metrics that we have on this chart, the first of those is the decline in housing values across America.
What this chart shows is that it is projected that housing values will decline, on average across America, by over 15 percent. Now, when you talk about that kind of decline in home values, it is not just a pain that is affecting those homeowners whose houses are in foreclosure, it is a pain that is being felt by the neighborhood, by the communities, by millions of people who own homes. It is a significant decline in home value.
When you look at home sales projected, home sales will be down to a level of 40 percent across the country. So when we get down to the bottom of the trough in housing starts, there is no end to it. The blue line here shows what happened in the 1980s when we had a similar kind of drop in the housing industry, where housing starts went down to 55, 58 percent in that decline.
The economists now project that it is going to be a 60-percent decline with no end in sight. So we do have a housing crisis on our hands. We have a crisis, a housing crisis on our hands. It is important that this Senate do something about it. So I would appeal to the Republican leader, to our own leadership, that we figure out a way of moving forward.
I believe that the legislation that Senator Reid introduced, the 2008 Mortgage Foreclosure Act, was a very good step in the right direction, and we should have had an opportunity to move forward with that legislation and to try to figure out ways of improving upon that legislation.
I am still hopeful that as this day goes on, as Friday goes on, as we come into next week, we will be able to pivot it over to address this very substantive and real issue that is causing so much pain to the people of America.
It is causing pain to the people of my State. When you look at this chart, produced by the Center for Responsible Lending, it tells you what is happening in my State of Colorado.
As to foreclosures which now are rampant across our State, 1 in 376 homes in Colorado is in foreclosure. We have not seen the end of it. By the time the teaser rates, the adjustable rate mortgages adjust themselves over the next 2 years, there is a projection that there will be 49,923 homes in foreclosure in the State of Colorado, 49,000 homes in foreclosure.
So, yes, people who are losing their homes obviously are going to go through a lot of pain. To go from a point where you are a homeowner to a place where you are in the street, obviously, is going to create a hospital of pain to those families that are part of these 50,000 people who are going to be affected by foreclosure.
This is not just a foreclosure issue. Because of what is happening, and every American homeowner is seeing this today, the pain spreads from those foreclosures to other homes in the area, and those people are also going to see significant declines in their values.
The spillover impact in the State of Colorado tells us that 748,652 homes are going to have values that decline because of the foreclosure situation. So this spillover impact is going to affect almost 40 percent of all of the homes in the State of Colorado. So it is a problem that is causing pain to, let's say, 3 million of the people who live in my State. So it is not just a foreclosure problem, but because of the spillover impact that we are going to see.
In my State of Colorado, when we look at the decrease in home values, when you accumulate that number, it is going to be a $3.2 billion impact. This is much more than about just foreclosure. It also is about the pain to homeowners who are seeing the price of their homes decline over time. It goes beyond those who are having their homes foreclosed upon and ending up in the streets. It goes beyond those people with the pride of home ownership who are seeing the values of their homes decline. It also goes to the industries and people who work in the home industry.
This article which came out of the Rocky Mountain News talks about what is happening with construction in the State of Colorado and Metropolitan Denver. The headline says it all, ``Metro Home Building Drops 34 Percent in '07 Permits and May Cost Up to 10,000 Jobs.'' We have hundreds of thousands of people who work in the home construction business, not only in my State but throughout the Nation. Many of those people who work in that industry are finding themselves today unemployed because of the housing crisis, a 34-percent drop in the number of housing starts, so there is lots of effects going on in our State.
My view is that Senator Reid did exactly what he should have done as our majority leader. He said we had moved forward, worked closely with the President and the House of Representatives to pass an economic stimulus package which was significantly improved over what the President and the House of Representatives had proposed. He felt, correctly, that we should now pivot from that issue to working on some of the longer term economic issues affecting our Nation. Certainly one of those top priorities should be housing. I believe we also should move on and deal with another aspect of a major national agenda, to make sure we are putting more into developing a new energy future for America. But today the issue is housing. That is what the majority leader attempted to pivot to today with the Foreclosure Prevention Act of 2008. That legislation had probably the support of most of the Members with respect to at least 90 percent of the substance included in the legislation, such as $10 billion over 3 years for mortgage revenue bonds to help families refinance their homes, $10 billion over 3 years. That was a bipartisan amendment that came out of the Finance Committee, sponsored by Senator Kerry and Senator Smith, a bipartisan amendment where I don't think there would have been people in this Chamber who would have stood up and said no. We could have helped the families of America deal with the housing crisis by providing them the refinancing opportunities with that kind of investment.
There is $200 million for credit counseling. It seems to me that most people have said the best thing to do is to get the homeowner and the financial institutions together, find out for the homeowner what the options are, and then get them to do a modification of their loan so they can stay in their home. That is what this legislation would have provided, $200 million for credit counseling. I don't know who would have disagreed with that concept. This legislation would have allowed $4 billion for community development block grants, CDBG grants, because there are some places in our Nation where the number of foreclosures is affecting those communities in a very negative way. Just as in the Commonwealth of Pennsylvania, my good friend Senator Casey will know those areas where you can drive down the street, and you can see homes that are in foreclosure, block by block by block. What this investment would have done, $4 billion in community development block grants, is helped those communities, those neighborhoods that are suffering the most.
This legislation also included other provisions that were good for the business community. Through the leadership of Senator Conrad, an amendment I helped cosponsor in the Finance Committee, we would have included in here a net operating loss carryback provision so that losses from 2007, 2008, and 2009 could be carried back for 5 years. That is an important provision for those who have been involved in the home building industry or those who are in other industries who are suffering the economic tough times we are in today. It would have given those businesses a kind of shot in the arm to create a robustness and a new future for them as they try to weather the difficult times.
In addition, the legislation would have required simplicity and transparency in mortgage documents. It would be a furtherance of truth in disclosure documents so that consumers, in signing up for a loan, would know exactly what it was they were signing up for. Those provisions would have been relatively noncontroversial.
Then what is it that has been raised as a reason to oppose us moving to address the housing crisis here in the Senate? The provision that says we should allow homeowners to modify their loans under very limited conditions with respect to home ownership. There was a sense from some Members on the other side that maybe that was going too far, maybe there were ways in which we could have worked to deal with that issue and some modifications that would address some of their concerns. But as written, as proposed, we tried to put some rails around it. We tried to say that the only ones who could take advantage of that provision were those who were home occupants. You had to be occupying the home before you could avail yourself of those provisions. You had to meet certain strict financial conditions so that there would be a showing of need before you could take advantage of that provision. You would have to be approved by the bankruptcy court. At the end of the day, you would have had a modification of a loan that would probably have been agreed to between the lender and the homeowner, if the homeowner wanted to stay in the home.
I am not an expert in bankruptcy law. It seems to me that under chapter 7 of the Bankruptcy Code, you can discharge almost any debt with certain limitations that are set forth in the code. There are other provisions of the Bankruptcy Code--as I recall, chapter 13--that say you can avail yourself of the bankruptcy court in order to modify your debt. If you want to pay back your debt in some way but you don't have the means, chapter 13 allows you to reorganize your debt by asking the bankruptcy court to allow you to pay your debt over a longer period under other terms that a bankruptcy court might impose with respect to the repayment of the debt. But it is not a debt forgiveness. If you are a homeowner today and you happen to own a vacation home and you have a debt on the vacation home, you can go to the bankruptcy court and modify your loan. If you happen to be a homeowner today and you own a recreational vehicle or some kind of a yacht and you owe a debt against that, you can go to the bankruptcy court and have the court modify your loan under a chapter 13 proceeding. You can do it with respect to any asset. But under the current Bankruptcy Code, you are not allowed to do that with respect to your home. It makes no sense to me in particular because of the kinds of rails and constraints that we put around this legislation as it was crafted.
I hope that we as a Senate, in addressing the pain that homeowners are feeling today, can move forward to provide a solution to help us weather these tough times. That is our duty and our responsibility. We as a Senate need to be judged by a very simple reality: Results matter. Stalling or looking away from a problem and pretending it doesn't exist doesn't work anymore. There needs to be a focus on dealing with the problems the American people are carrying on their backs today. Certainly the housing crisis is one of those burdens they are carrying with significant pain.
I hope the voices of the American public, the voices of those who are in home ownership, will rise so that tomorrow or on Monday we can figure out a way of moving forward to putting together a solution on the housing crisis that is affecting us in America today.
I yield the floor.