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Providing for Consideration of H.R. 5072, FHA Reform Act of 2010

Floor Speech

Location: Washington, DC

Mr. FRANK of Massachusetts. First, I want to acknowledge the praise given to the gentlewoman from West Virginia (Mrs. Capito), and, I would add, I was thanked, but the gentlewoman from California (Ms. Waters) worked closely with Mrs. Capito to bring this bill forward.

Secondly, on the deficit, this Friday morning I will be at a meeting. The gentleman from Texas (Mr. Paul) and I are beginning an enterprise to pull back the excessive overreach of America militarily. We are spending more money now defending Western Europe from an enemy unknown to anybody--including those in Western Europe--than we're spending on virtually any domestic program. So, yes, I welcome that, and I'll look to see where we are on that.

I support President Obama's efforts to save money in the space program. Frankly, when people tell me that we have got a serious debt crisis but they're willing to commit hundreds of billions of dollars to send a human being to Mars so he or she can be brought back--and the President is not, I think, correct on this--then I am also skeptical.

Some of my friends in the Agricultural Committee and in the South who support sending $147 million of American tax dollars to the Brazilian cotton farmers to offset the subsidy given to American cotton farmers, I doubt their true depth of their commitment to cutting the budget.

But let me talk about revisionist history.

The Republican Party controlled the Congress from 1995 to 2006. No legislation changing Fannie Mae and Freddie Mac went through. President Bush controlled the executive branch for 2000 to 2008. What he did--he said he wanted some reform. You've heard the former chairman, the former Republican chairman Mr. Oxley, denigrate Mr. Bush's cooperation there. But in 2004, the Bush administration ordered Fannie Mae and Freddie Mac to increase the number of mortgages they bought for people below the million income. And at the time I said I thought that was a mistake; wrong for the people who were being pushed into this, wrong for Fannie Mae and Freddie Mac, and, in fact, it led me to change my opinion.

In 2003, I didn't think Fannie Mae and Freddie Mac needed change, but George Bush converted me. He converted me when he sent them much too deeply, by his decision, into more subprime mortgages. I thought it was better to use Fannie Mae and Freddie Mac for affordable rental housing. Once that happened, I joined Mr. Oxley in 2005 in an effort to pass a bill, and I supported a bill that passed in the House.

Now, we're going to hear from some Republican Members today who say nothing was done. You know what their problem was, Madam Speaker? They couldn't get the support of their own Republicans. The Republican leadership of the Financial Services Committee today, the Republican leadership of the House today joined Mr. Oxley to be repudiated and yet it had some amendments.

But let's be very clear. The bill that passed the House in 2005, which I, by the way, ultimately voted against not because of anything to do with Fannie Mae and Freddie Mac, because of restrictions that were added by the Rules Committee in the self-executing rule to housing programs through affordable rental housing that would have, for example, kept the Catholic church from participating in that.

But on the substance of the bill you will hear that, well, there were amendments and many of us opposed those amendments. That's true. I opposed some of those amendments. The chairman of the committee, Mr. Oxley, opposed those amendments. The Republican leader today, Mr. Boehner, opposed those amendments. The majority of Republicans on the Financial Services Committee today opposed those amendments. No amendment offered in either the committee or on the floor of the House by the handful of Republicans who will be here today blaming the Democrats, when the Republicans controlled the White House and the Republicans controlled the House and the Republicans controlled the Senate, the House passed the bill, and a handful of Republicans opposed it. And no amendment they offered on the floor or in committee got a majority of Republican votes. If no Democrat had voted on that bill, the outcome would have been exactly the same.

In 2007, when the Democrats took the majority, I became the chairman, and for the first time, the Congresses did, in that Congress, pass a bill to reform Fannie Mae and Freddie Mac. It was held up in the Senate, unfortunately. We did it in 2007. But under that bill, Secretary of the Treasury Paulson, acting on behalf of President Bush, put Fannie Mae and Freddie Mac into conservatorship.

So when people say nothing's been done, in fact, the most drastic reform to date in the financial area came when Secretary Paulson, under authority given to him by the Democratic Congress in 2008, put Fannie Mae and Freddie Mac into conservatorship. The debts that are owed are the debts that were incurred during the period when George Bush was President and when the Republicans were unable to enact legislation to reform Fannie Mae and Freddie Mac.

Now, there was some here who were on the other side. I was unconvinced of the need to do that in 2003. In 2004, when the Bush administration pushed Fannie Mae and Freddie Mac more deeply into buying sub-prime mortgages, I opposed that, as I will put in the RECORD, and then joined Mr. Oxley in trying to reform it.

Fannie Mae and Freddie Mac are today in conservatorship. They got up and testified before our committee, unchallenged by any of the Republicans who were tougher in his absence----

As Secretary Donovan testified, unchallenged by any of the Republicans, Fannie Mae and Freddie Mac are not now costing the taxpayers any money. The money that is owed is from the prior activity before Secretary Paulson put them into conservatorship with authority that he did not get from a Republican Congress but from a Democratic Congress, and Secretary Paulson said it wasn't a perfect bill but it was a bill that he could work with.

Since then, Fannie Mae and Freddie Mac have been in conservatorship. They have already been drastically changed, and they are not costing the taxpayer moneys. Clearly, we have to take a next step, but we have consulted with the Realtors, with the home builders, with advocates for low-income housing, with virtually everyone concerned with housing, and their recommendation is, yes, keep them in conservatorship and replace them.

The Republican plan that you have heard, the plan of the minority of Republicans from 2005, abolishes them with no replacement, and so housing finance is left in a turmoil. We have Ginnie Mae, we have the FHA, we have the Federal home loan banks, we have Fannie Mae and Freddie Mac. Yes, we believe there should be a sorting out of these things, but let's again just summarize.

I have been told that it was my fault that during the Republican years in Congress we didn't pass a bill on Fannie Mae and Freddie Mac. Well, Mr. DeLay of recent memory was in charge of the House agenda then, and I have to disclaim the notion that I was secretly advising Mr. DeLay, and I'll prove that to you, Madam Speaker. If I were giving Mr. DeLay advice, I would have told him not to go on the dance show. It wouldn't have just been Fannie Mae and Freddie Mac that would have benefited; a lot would have benefited.

But we were frustrated by him. He was in charge of the housing agenda. A few Republicans wanted to change it. They were outvoted by the Republican majority. When the Democrats took office--and you can read this in Secretary Paulson's book--we cooperated with the Paulson administration. We gave them the authority to put it into conservatorship. They are now both in conservatorship, and we await the next step.


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