Statements on Introduced Bills and Joint Resolutions

Floor Speech

STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS -- (Senate - April 10, 2008)

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By Mr. KERRY:

S. 2847. A bill to amend the Federal Home Loan Bank Act to allow Federal home loan banks to invest surplus funds in student loan securities and make advances for student loan financing, and for other purposes; to the Committee on Banking, Housing, and Urban Affairs.

Mr. KERRY. Mr. President, to many young people, from all walks of life, are either struggling to pay for college or flat out can't afford it. Those who aren't able to incur the steep costs of a college education are not only losing out on a degree, but setting themselves up to face a lifetime of lost opportunities, as study after study shows college graduates are the most attractive candidates for the fastest-growing and best-paying jobs of tomorrow. Greater college access, gained through financial assistance, is critical to making the American dream a reality for all.

Yet prospective student borrowers are about to encounter massive impediments to acquiring quality, affordable private loans. The credit crunch currently impacting the home mortgage sector is set to extend to the student loan marketplace. Without sufficient liquidity in the market, student borrowers will find it harder and harder to find loans for their costs of college next year. According to FinAid.org, student loan originators are increasingly choosing to exit or suspend their participation in all or part of the Federal Family Education Loan Program, FFELP--45 since last August alone.

Unfortunately, however, Federal Reserve Chairman Ben S. Bemanke has indicated that the Federal Reserve is unlikely to take aggressive action at this time to help the student loan marketplace. Therefore, I am seeking to address this significant issue by introducing the Emergency Student Loan Market Liquidity Act.

This legislation will temporarily amend the Federal Home Loan Bank Act to allow the Federal Home Loan Banks to invest surplus funds not needed for advances to its member banks for student loan-related securities. It would also allow the Federal Home Loan Banks to accept student loans and student loan-related securities as collateral. Finally, the bill authorizes each Federal Home loan Bank to provide secured advances to its members to originate student loans or finance student loan-related activities. This will provide funds for banks to help provide critically-needed student loans during these difficult economic times.

The Federal Home Loan Banks are today an essential source of stable, low-cost funds to financial institutions for home mortgage, small business, and rural and agricultural loans. With their members, the Federal Home Loan Banks represent one of the largest sources of home mortgage and community credit. There are twelve Federal Home Loan Banks, including one in Boston, each located in different regions of the country. Their cooperative structure is ideal for serving the system's 8,100 member lenders.

Today, the Federal Home Loan Banks provide billions of dollars of primary liquidity to approximately 80 percent of the Nation's financial institutions. By providing this additional student loan authorization to its members, member institutions will be able to remain active in the student loan marketplace and help students pay for their education.

This legislation is absolutely vital to securing the opportunity of higher education for all who choose to pursue it.

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