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Providing for Consideration of H.R. 1728, Mortgage Reform and Anti-Predatory Lending Act

Floor Speech

Location: Washington, DC



Mr. FRANK of Massachusetts. Madam Speaker, I am grateful for this very clear delineation of the Republican philosophy, ``do nothing about subprime mortgages.'' Now, the gentleman from Texas did say, well, the Federal Reserve is doing it. Understand that in 1994, a Democratic Congress gave the power to the Federal Reserve to promulgate those regulations. Alan Greenspan refused to use them. From 1995 on, he refused to use them.

At some point in the late 1990s and the early part of this century, it became clear to many of us, led by my colleagues from North Carolina, Mr. Miller and Mr. Watt, that we had problems in the subprime area. And people tried to get Mr. Greenspan to do it, and he wouldn't do it. So we then said, ``okay, we had better act legislatively in the absence of the Federal Reserve doing it.'' We were blocked from doing it by the Republican leadership of the House.

The gentleman from North Carolina (Mr. Watt), the gentleman from North Carolina (Mr. Miller) and I tried to get some legislation. Some Republican Members were ready to cooperate with us. But the decision came from the Republican leadership ``no.'' So from 1994, when Congress voted authority to the Federal Reserve, until 2007, after the Democrats had come back into the majority, nothing was done to block subprime mortgage abuses. Nothing. And not a single piece of legislation came forward when the Republicans were in control.

Now, I would add, by the way, that in 2007 we did a bill, we had some bipartisan cooperation, not a majority of Republicans, the bill passed the House but failed in the Senate. It didn't come up. Now we are doing it again. At no point have we seen a Republican alternative. The gentleman from Texas had some criticisms. We have never seen a Republican proposal to deal with subprime mortgages. Now they might say, ``well, we are in the minority, what is the point?'' But they were in the majority, Madam Speaker, from 1995 to 2006.

The gentleman from Texas (Mr. Hensarling) submitted an amendment to the bill which talks about how subprime mortgages skyrocketed in percentage from 2002 to 2006 under the Bush administration and under Republican control of Congress. Members on the Democratic side said, ``let's do something it about it.'' The Republican answer was ``no.'' So we have here the clearest demonstration of the Republican approach of ``do nothing.'' But then the gentleman said, ``oh, no, the Federal Reserve has done it.'' Well, first of all, understand the inconsistency between conservative attacks on the undemocratic nature of the Federal Reserve in some context and the decision to allow Congress to let them legislate instead of the Congress.

The notion, we heard it on credit cards and we heard it today, the notion that the elected officials of this country should not intrude when the Federal Reserve has proposed legislation turns democracy on its head and is wholly inconsistent with other arguments we get. Beyond that, while I appreciate what Mr. Bernanke has done----

The SPEAKER pro tempore. The time of the gentleman has expired.

Ms. PINGREE of Maine. I yield the gentleman 2 additional minutes.

Mr. FRANK of Massachusetts. Mr. Bernanke, to his credit, repudiated the no-regulation, extreme conservative philosophy of Mr. Greenspan and promulgated rules, but only after a Democratic Congress began to act on this. And I think he did a good job and deserves credit.

The problem is that there are things he cannot do. The Federal Reserve cannot change statute. So, yes, this bill goes beyond what the Federal Reserve did. I'm glad the Federal Reserve is doing it. I'm glad that Mr. Bernanke reversed the Greenspan position which had been supported by the Republicans to do nothing. We will debate individual cases of this. As to legal services, yes, we have had examples of individuals being evicted, being foreclosed inappropriately. What this does is to say that they can get some legal help. This is a defensive measure for people who are going to be losing their homes. And we found that there were some problems there.

As to securitization, we will get into this. But, yes, I do agree we have people who have come to us and said, ``you know what? We don't have any money. Why don't you let us make loans?'' Well, we don't think people should be lending money they don't have and immediately selling the loans. Here is the point, Madam Speaker, we will get into it later. The extension of loans to people who shouldn't have gotten them, partly the fault of the borrowers, partly the fault of the lenders, whatever the reason, that was the single biggest cause of the subprime crisis.

And the record of the Republican Party, from taking office in 1995 until today, is to oppose overwhelmingly any effort to do anything about it, from Mr. Greenspan's refusal to use the authority he was given to the failure of the Republicans to this day to come forward with any constructive legislative alternative. So, yes, there might be room for debate, but as between doing something to prevent this and doing nothing, I believe ``something'' wins.


Mr. FRANK of Massachusetts. Madam Speaker, the gentleman from Texas is wrong to say we didn't want action. Yes, in the early part of the century we thought there wasn't a crisis. We tried to get Alan Greenspan to use the authority we gave him.

In 2003 I said that Fannie Mae and Freddie Mac were in crisis, as I didn't think they were, as Wachovia wasn't and Merrill Lynch.

In 2004, the Bush administration ordered Fannie Mae and Freddie Mac significantly to increase the subprime mortgages and low-interest mortgage rates. At about that time, and as Mr. Hensarling's amendment shows, it was around that time that the Bush administration presided over a great increase in subprime mortgages.

Beginning in 2003, we tried to get legislation adopted, and the Republicans said no. The Republicans wouldn't do it. It wasn't until 2007 that there was any action at all. And it is not a coincidence that the Fed was given authority under a Democratic Congress in 1994 and didn't exercise it until a Democratic Congress came back in 2007. Yes, I was in the Congress. I was in the minority, and I was frustrated by the failure of the Republicans to do anything.

The SPEAKER pro tempore. The gentleman's time has expired.

Ms. PINGREE of Maine. I yield an additional minute to the gentleman from Massachusetts (Mr. Frank).

Mr. FRANK of Massachusetts. Now under Mr. Oxley, he did try to amend the rules to regulate Fannie Mae and Freddie Mac, and a bill passed the House in 2005. I voted for it in committee, but opposed it on the floor because it restricted organizations like the Catholic Church from participating in affordable housing. But the bill failed after 2005. The bill to regulate Fannie Mae and Freddie Mac, which passed the House, where I served, it died later on in part because, as Mr. Oxley has made clear, the Bush administration and he got into a disagreement.

So the Republicans had authority to pass bills on Fannie Mae and Freddie Mac and subprime lending for 12 years and did nothing. We, in 2007 when we came into the majority, very promptly passed a bill to regulate Fannie Mae and Freddie Mac and to regulate subprime lending over consistent Republican opposition.


Mr. FRANK of Massachusetts. Mr. Speaker, first I reiterate, yes, I did say in 2003 I didn't think we had a crisis. As the Bush administration increased the number of subprime loans that it required Fannie Mae and Freddie Mac to take, and as we saw the subprime crisis, I said we did have one and pushed for legislation. But most importantly, the gentleman referred to what is called the SAFE Act. It did not pass as a standing bill. First of all, during the period when the Republicans controlled the House for 12 years, they passed no such legislation. It never even came up in committee. When the Democrats took power, we passed a subprime bill. The provision he is talking about was the section of the subprime bill that was passed over the objection of a majority of the Republicans.

My guess is that the gentleman from Texas probably voted against the bill he has just hailed. We can check the Record.

But, yes, there was an amendment offered by the gentleman from Alabama that we worked on. It became a part of the Democratic bill that was passed over the objections of a majority of Republicans, and the gentleman from Alabama was severely criticized by most Republicans for voting for the bill.

The SPEAKER pro tempore (Mr. Ross). The gentleman's time has expired.

Ms. PINGREE of Maine. I yield the gentleman an additional 30 seconds.

Mr. FRANK of Massachusetts. During the period of Republican rule, nothing happened. When the Democrats took over, we did pass a subprime bill of which the SAFE Act was a part. It was opposed in final passage by a majority of the Republicans. The author, Mr. Bachus, was criticized by many Republicans for supporting the bill. And I would be interested in knowing whether the gentleman from Texas voted for the bill which he has just hailed.


Mr. FRANK of Massachusetts. Mr. Speaker, as I was saying, the notion that the differences between the parties is irrelevant, I understand why, given the Republican's record, they want to argue this.

The fact is, yes, the gentleman from Alabama had a good idea. He was chairman of the subcommittee during the 12-year period and could have brought it to the floor. But because of the Republican position that no regulation was appropriate, he couldn't do that. The gentleman from Texas said this was a very good idea. I agreed; that's why I supported it.

By the way, the gentleman from Texas voted against the bill, along with two-thirds of the Republicans that embodied it. So we wouldn't have had it if he had carried his way.

But the fact is that for 12 years after the subprime crisis broke, the Republican Party wouldn't allow the gentleman from Alabama, who was then chairman of the subcommittee, to bring his bill up. We did bring the bill up, yes, in a bipartisan way. Unfortunately, the gentleman from Alabama was then criticized by Members of his party on the conservative side and has been forced to withdraw it a little bit.

The SPEAKER pro tempore. The gentleman's time has expired.

Ms. PINGREE of Maine. I yield 15 seconds to the gentleman.

Mr. FRANK of Massachusetts. Differences between the parties are relevant. For 12 years, the Republicans wouldn't allow the gentleman from Alabama to bring his bill to the floor. In our first year, we did and I was glad to work with him, but it was a minority position opposed by the great majority of the Republicans, including the gentleman from Texas.


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