Press Conference with Senator Christopher Dodd (D-CT); Senator Jack Reed (D-RI); Senator Chuck Schumer (D-NY)
Press Conference
PRESS CONFERENCE WITH SENATOR CHRISTOPHER DODD (D-CT); SENATOR JACK REED (D-RI); SENATOR CHUCK SCHUMER (D-NY)
SUBJECT: HELPING FAMILIES SAVE THEIR HOMES ACT
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SEN. DODD: Well, listen, let me begin by thanking Senator Reed, both Jack Reed and Harry Reid, the Majority Leader and the leadership team, Senator Durbin, Chuck Schumer and others who made it possible for all of this to happen, and that is to be able to get the bill up.
I thank my committee members, obviously, for working on the legislation.
This bill is principally designed to provide that long sought for relief for people who are facing foreclosure. The bill does other things, but certainly, a major target is to deal with peoples' housing issues and try to stem the tide. We're looking at some 17,000 foreclosures that will go -- homes that will go into foreclosure in my home state of Connecticut this year and I know other states may be facing larger numbers, but all of us worry every day when you get 20,000 people losing their jobs and some 10,000 a day losing their homes. Those numbers are still holding up, unfortunately, in the country.
And so this bill was designed to strengthen the Help Homeowners Act, provide additional resources and support for FHA and rural housing as part of our proposal to see to it that we would provide some safe harbor for our servicers who run the risk of being sued by investors because they were modifying loans that would allow people to stay in their homes, which is going to be essential.
What Jack Reed did, among other things was, of course, to give us more flexibility for the TARP recipients and the Treasury in terms of responding on warrant issues, which is a major part of the bill and the homeless provisions that Jack Reed authored with Senator Bond, were a major step again, the housing issues, people who are losing their homes, can't afford rents.
We've had a 13 percent increase in Connecticut in homeless families and the largest rising percentage of people homeless are children, and so I want to thank Jack Reed for that. Harry Reid added $130 million to what I call the Schumer provisions going back last year, providing real money for those organizations and groups that are providing the counseling for people and Harry Reid added $130 million to that, which was tremendously helpful.
Increasing the deposit insurance and the borrowing authority are also critically important for consumers in this country. This is going to be tremendously important to avoid the kind of runs that can occur on those institutions and then exceeding in raising the borrowing limits where necessary also will be tremendously important.
I want our community banks and others to know we stretch out the assessments for credit unions and community banks to eight years so they won't be faced with overly burdensome assessments, making it harder for them to meet those obligations and we're told that they're very pleased with the legislation. I thank them for their support of it as well.
So I'm very appreciative of my colleagues. This is not going to solve every problem, but people like Chuck Schumer and Jack Reed and others, beginning in early 2007, in fact, before then, highlighting the importance of the residential mortgage crisis in the country. We had 82 hearings and meetings in the last Congress on the subject matter, tried every imaginable way to get the banks and servicers to try and modify loans to people who could stay in their residences.
This bill will allow us, I think, to get closer to achieving those goals we've sought over the last couple of years to making it possible for people to be there.
I want to thank John Kerry as well. He authored a very good amendment dealing with renters, so renters can stay in their homes where they're current in their rental obligations, even though the property may have been foreclosed, not evicting those tenants, which is of major importance.
Chuck Schumer offered a similar idea that, unfortunately, was objected to by a handful of people on the other side that multi-family housing would have made a difference as well and we'll come back to that issue at another time, I hope soon so that those folks as well can be protected from the vagaries of this economic crisis we're in.
Well, now, let me turn to Senator Reed and Senator Schumer for any comments they want to make, but I thank my colleagues and I think a 91-5 vote, an indication of the kind of cooperation and I want to thank Senator Shelby, obviously, was very cooperative, he and his staff on this bill and that made it easier for us to get the results we did. We had some 20 amendments that were offered over the last two days and we accepted many of them, Senator Grassley, Senator Boxer, made significant contributions, Senator Casey, as well. There's a list of people who added to the value of this bill, and I appreciate their support.
Jack?
SEN. REED: Well, thanks very much. I want to commend Chairman Dodd for his great leadership on this very important legislation and also, Senator Shelby, for his cooperation has helped. One area that I'm particularly pleased about is passing the homeless assistance bill; it reorganizes the delivery of homeless assistance. It provides a more efficient approach rather than three separate applications by local authorities. It will be one application.
It will also insist upon accountability in terms of how these funds are used. It will provide flexibility at the local level. It has been endorsed by the National Association of Mayors, by all of the groups that are committed to helping people avoid homelessness, and frankly, we're facing the greatest crisis in homelessness since the Great Depression.
When you see on the front pages of major newspapers tent cities springing up, then we have a real problem. The Dodd legislation deals with the issue of preventing foreclosure, keeping people in their homes. My contribution, along with Senator Kit Bond, who I want to thank immensely for his help on a bipartisan basis was to try to recognize that there are people who are without homes and they need help and not just temporary shelter, but permanent supportive housing.
It's very efficient, very effective way to do it.
There's another aspect that's important. We're authorizing $440 million for HUD to help people avoid homelessness. In many cases, it's just the ability to make the utility payment or a month or two of rent that will tie them through a bad time and keep them in the property, and now there is a resource and the flexibility to do this.
One other point I'll make, too, about another aspect, an amendment I offered and that is with respect to the warrants, which are part of the TARP program.
Under the present law, financial institutions may decide to repay their TARP funds. My legislation made it clear that with respect, not to the TARP funds, but to the separate warrants that were issued at the same time, that the Secretary of the Treasury has the discretion either to surrender them for market price or to keep them if he feels he can obtain larger values in the future or that it's appropriate to do so.
I just think in terms of adequately compensating the taxpayers for their investment in these financial institutions, it was necessary to give the Secretary of the Treasury the flexibility to either surrender these warrants or to hold them so that they can realize a larger return to the taxpayers, and again, let me commend the chairman and my colleague, Chuck Schumer.
SEN. SCHUMER: Thank you. Well, let me thank first, Chairman Dodd. He has really been at the forefront of the housing issue, both as it affects people who would lose their homes, as well as the economy as a whole and he's been terrific on this and Senator Dodd's legislation leading the Banking Committee, we're occupying the floor more and more time and doing more and more good things. I imagine next week we're going to go to the credit card legislation as well under Chris' leadership and the people throughout the country and in his state should know how hard he is fighting for the average person.
I want to thank Jack Reed. He has just been an amazingly effective, first, chairman of the housing subcommittee and senior member of the banking committee in terms of so many different issues, today, we're talking about homelessness and affordable housing, things that he has really helped millions, at least hundreds of thousands of families, soon to be millions as the programs go on in years.
I'd like to focus on two provisions here that affect the overall housing market; one is foreclosure counseling, something that I've been pushing for a very long time. We still know that if people can get counseling, many of them can avoid foreclosure. It's the cheapest, easiest, best way to set the housing market right and there's a significant increase here because all of the funds we've appropriated over the last few years have been used up and no one has claimed they've been wasted.
The second, and this one, I think, will have a great affect is the safe harbor. Here's the bottom line. Until we put a floor on foreclosures, we will not see housing prices stabilized. Until we see housing prices stabilized, we will not see banks starting to lend again, and until banks start lending again, we won't see the economy turn up.
So this ankle to shin to knee to thigh to hip and it's really important. And servicers in the past, even though they would want to and have a fiduciary obligation almost to the whole mortgage to refinance, to do loan modifications have been afraid to because one tranche holder, the one who took the riskiest piece, who got the highest interest rate now says I'll sue you because that tranche holder says, I'll get wiped out if there's a loan modification, but maybe in five years, housing values will go up. Meanwhile, what they're making happen is the economy just goes down the drain and to now give the servicers breathing room so that they can do a loan modification is going to have a major effect. This is the unsung, quiet hero of this bill, which has many, many good provisions and it's going to make a huge, huge difference. We've been waiting for this for a long time and I'd like to thank Chairman Dodd for doing so much in this area as well.
SEN. DODD: Mel Martinez, too, is a great help on that.
Q (Off mike.)
SEN. DODD: You know, I've been reading the press accounts and I'm not questioning the veracity of them, but until I hear the results on Thursday, I want to be careful about commenting on it. I'm sure those numbers are probably right, but I'd rather wait until I actually get the numbers and a briefing, which we're supposed to have with the committee by the Treasury on these in advance of that, so I'm going to reserve any judgment on these numbers until I actually get a formal indication of what they actually are.
My colleagues may have a different point they want to make.
Q (Off mike.) With regard to the borrowing authorities in the FDIC --
SEN. DODD: Right.
Q (Off mike) -- TARP programs and the FDIC is tasked with the public-private partnership aspect of it -- (inaudible) --
SEN. DODD: Well, I think there will be some reluctance on the part of the FDIC for that and my guess is and they'll want to do that. Obviously, that would in some way undermine the very purpose of what these funds, the borrowing funds are for and so my view would be that would probably not be the case and I think any action like that would be -- would probably be resisted, both by the FDIC and I suspect some of our colleagues up here as well.
SEN. SCHUMER: I think Chris is right; it's apples and oranges. It's two different functions of the FDIC, two totally different programs and at least at this point, the twain don't meet.
Q (Off mike.) When will that be addressed and how do you think it should be addressed -- (inaudible) --
SEN. DODD: Well, as you know, we had an amendment offered that would prohibit the Treasury from converting preferred to common shares and we defeated that amendment when it was offered and the reason we wanted to give flexibility, obviously, to the Treasury.
Preferred shares are really a debt instrument more than anything else and the common shares, obviously, common stock is -- and the market reacts to common stock is real capital and so at a time when you're trying to get credit moving, that option of converting preferred to common shares can be critically important to try to get lending going to Main Street and the country.
So I think you've got to be careful about mandating and I wouldn't mandate that you have to convert, but I think giving the Treasury the opportunity of that flexibility is essential and when it comes to the taxpayers as well and in the final analysis, the money that's been put in by the taxpayer, there's a better chance they're going on the upside, do better as a result of companies doing better and the common stock will provide that additional resources.
So for all those, both those reasons, principally, I think that was an important provision that we have and to have undermined it, restricted it, I think, would have been a setback.
The idea, listen, I can't speak for everybody here. I'm not enthusiastic about the government getting into the business of managing these banks, I mean, we've got to get out of this business as quickly as we can and so I understand and appreciate stepping in to stabilize and taking majority positions in these institutions, but I want to see us get out of it as fast as we can. This is not a function government does well, and while this is a bizarre moment, an unchartered moment in many ways and so I accept the notion of capital infusions, the purchase of toxic assets, my desire is that we get out of this business as fast as we possibly can.
Q (Off mike.)
SEN. DODD: Well, I'll talk to Barney on the other side and I know they've been watching carefully what we've been doing on this and we may not even have to have a conference, it depends on how they react to some of the amendments that were added to the bill and so I'll talk to him this evening and tomorrow and get a temperature on that, and my hope is if we need to sit down, we'll be able to do that very quickly.
Q (Off mike.)
SEN. DODD: Well, I don't know if they will or not, but that's certainly a possibility.
Q (Off mike.) Any specific -- (inaudible) -- available?
SEN. REED: No, I just wanted to give them more flexibility. I think, first of all that it's very clear that they have to sell at the market price, but sometimes the market price is a legitimate issue of negotiation, what is the true market price of a warrant? And I just think that they should have the discretion to either surrender if they think that's in the best interest of taxpayers and further the overall program or be able to keep these instruments. Most of the instruments as I understand it, I've seen some of the forms are for a ten year period. They have a strike price that the final value depends upon the current market price of stocks.
So it just gives the Secretary the kind of flexibility that I think is appropriate to deal with these issues.
Q (Off mike.)
SEN. DODD: Well, no, I supported Dick Durbin's amendment -- I remember standing here with Chuck and Dick several weeks ago on the issue and I regret that we weren't able to reach that agreement on tent city and a few others, Chuck, that supported that effort. They negotiated down to a very, very limited application of it, and as you know, it was rejected, unfortunately and that would have been a very important addition to this bill in my view in terms of achieving the results of getting the loan modifications and keeping people in their homes.
It's awfully difficult to explain. I've always been curious how you explain the fact that you could have a cram down on vacation homes, beach houses, mountain cabins, yachts, boats, but you couldn't on a principal residence. I never quite understood the logic why one would somehow set the markets in the wrong direction and the other one didn't, but nonetheless, my colleagues expressed their views on it for the time being and that issue is a dead letter.
Thank you.
END.
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