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

Floor Speech

Location: Washington, DC



Mr. FRANK of Massachusetts. Yes, in 2003, I said I didn't see a crisis. What I didn't see was at that time the Bush administration was engaging in activity that helped us get to a crisis.

I refer Members again to page 183 of the bill, the amendment authored by the gentleman from Texas (Mr. Hensarling), which notes that in 2004, the year after I made the statement, the Bush administration ordered Fannie Mae and Freddie Mac substantially to increase the number of mortgages it bought from low-income people. It went from 42 percent to 56 percent--a very significant increase in mortgages of people below median income--and set up a special category for low-income mortgages.

As Mr. Hensarling's amendment also shows, from 2001 until 2006 there was an enormous increase in subprime mortgages.

So, yes, in 2003, I was not aware of what was going on in that context, and I certainly didn't predict what was going to happen in 2004. When the Bush administration made that decision in 2004, according to the amendment from the gentleman from Texas (Mr. Hensarling), I objected to it. I said they were going to put Fannie Mae and Freddie Mac in danger and give people mortgages they couldn't pay back.

I then decided that we did need to do legislation. So I joined the chairman of the committee, Mr. Oxley, in trying to regulate Fannie Mae and Freddie Mac more.

In 2005, I voted with him for a bill that passed the committee to regulate Fannie Mae and Freddie Mac. I disagreed with the version on the floor because it cut affordable rental housing, not homeownership.

But the bill passed the House. It then died because, according to Mr. Oxley, the Bush administration opposed it for ideological reasons.

So, yes, in 2003 I didn't see a crisis, because I didn't see what was happening in the subprime market; by 2004, I did; and, in 2005, I joined in trying to restrain that. It is also the case that, in 2003, two of my colleagues, Mr. Miller and Mr. Watt of North Carolina, began pushing for subprime reform because they were informed about what was happening. I joined them. So we did try to legislate. So the answer is yes, in 2003 we didn't see what was happening.

I commend Members again to page 183 of the bill. Mr. Hensarling from Texas had given you the statistics. Subprime mortgages were skyrocketing in that period. Fannie Mae was being pushed by the Bush administration to do something, and we then tried to deal with it.

The last point that I find very surprising is that conservatives say here, as some of them said on credit cards: Oh, no, do not have the elected representatives of America decide this; let the Federal Reserve make public policy. I had thought there was some concern about undemocratic decisions by the Federal Reserve.

The gentleman from Texas has said today, as others said last week: Oh, the Federal Reserve has done it. There is no need for the elected officials to do it. Well, in fact the Federal Reserve hasn't done anything because they cannot change statute. But even if they had, they could change it in the future. But the notion that we should defer on major policy decisions, not technical monetary policy issues but major policy decisions about credit cards or about what kind of mortgages we issue to the Federal Reserve, and not legislate is surprising.

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

Mr. CARDOZA. I yield the gentleman an additional 30 seconds.

Mr. FRANK of Massachusetts. I admire the people at the American Bankers Association, and they do some useful things. But I am surprised that Members would think that, on the question of mortgage relief and regulating the mortgage market, the bankers of America are the ones to listen to. I am pleased that the Realtors, who do not have an economic interest in what kind of mortgages are there but have a genuine interest in promoting home ownership, are on our side and strongly support this bill.

So I would say to my friends and the American bankers, I understand that there are things here that we are telling you that you can't keep doing, but I think the answer is that they were things you shouldn't have done in the first place.


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