Economic Justice Issues

Floor Speech

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Mr. GREEN of Texas. Madam Speaker, I thank the gentlewoman for the opportunity to speak, and I commend her for her stellar effort to bring justice to the housing circumstance in our country.

I am honored to say that I did visit her congressional district, and we had a field hearing that was quite successful. She truly is engaged and involved in making a difference in her community.

Madam Speaker, I was there in 2008 when we had the housing crisis. I remember when Secretary Paulson came before the committee. He was there in need of some funds for what were called toxic assets. He was there because the market was in a free fall. He was there because there was an imminent crisis that had to be contained.

I remember him asking for a large sum of money with few pages, probably less than 5 pages. He wanted us to infuse capital into a process that would allow us to purchase these toxic assets. He was indicating to us that this was an emergency. He did not ask for hundreds of millions of dollars. He did not ask for tens of billions of dollars. He requested hundreds of billions of dollars.

I do recall that I spoke to constituents, and being the judicious person that I was, I did pay attention to my constituents who encouraged me and insisted that I not bail out the big banks. That was the language that was used: Do not bail out the big banks, Al.

I was judicious. I listened to my constituents. When we took the vote on the floor to accord the sum of 700-some billions of dollars, I remember standing over in the door and looking at the vote. I could also see the stock market at the same time. As the bill was failing, the stock market was crashing. It was a day that I will never forget. I went back home, and I visited with my constituents.

The constituents said to me: Al, what is wrong with you? You did not vote to save my 401(k). You let the market fall. You could have voted to support us.

I learned an invaluable lesson that day. The lesson is this: there are times when you have to do what you know to be the best thing, even when your constituents might stand in opposition to it. That is the lesson that I carry with me to this day. I came back. We had a second vote, and I voted for the funds necessary to deal with the toxic assets.

One of the reasons why I was so concerned about this was because I understood what was happening. There were instruments that were in the marketplace that were not suitable for everyone. We had something called a 327 and a 228; 3 years, 2 years of a fixed rate, and then 27 years or 28 years of a variable rate. This was not suitable for everyone. We had no-doc loans, meaning no documents necessary, and you could walk in and work out some means by which you could acquire a loan, Madam Speaker. We had negative amortization, a process that allowed you to at some point continue to owe more than you initially borrowed.

We had something called the yield spread premium. The yield spread premium allowed the person who originated your loan to originate a loan for you for an amount in excess of what you qualified for. Here is how it worked: That person would check to see what you were eligible for as a rate. You could qualify for a loan at 5 percent, but at that time because of the yield spread premium, the person originating could come out and say, good news, I have a loan for you for 8 percent. You qualify for 5, you get a loan for 8 percent interest, and the person would never have to tell you that you qualified for the 5 percent. The money between 5 and 8 was called the spread, and the yield on that spread could be shared with the person who originated the loan and the lender, the yield spread premium.

Poor people, well, people who are of little means who acquired homes with these 327s and 228s, that I mentioned where the rate would go up and down, they lost homes. It is said that in the African American community a generation of wealth was lost--a generation. The community is still recovering from the 2008 downturn.

I believe that we do have to reconsider how we address housing in this country. There are some people who are born into poverty. They are not born into plenty. For those who are not born into poverty, it is not easy to work your way to plenty. So we have to have housing as a means by which they can acquire and accumulate wealth.

One of the things that I tried to do--and there are many things that can be done--is to use something called alternative credit scoring. This is where you will score a person's light bill, gas bill, water bill, phone bill, and cable bill and use that information with the traditional credit to allow that person to have maybe the little additional help needed so as to acquire a loan. It is a pilot program. We have passed the bill out of committee. It is H.R. 123.

This piece of legislation will allow many, many persons with thin files and with little credit, because they haven't been in the credit market, to get a home. Many people who are paying now X number of dollars for rent will be able to acquire a home for X minus some amount, meaning less than what they are paying for rent, they will be able to acquire a home.

I am pleased to say that many of the prudential agencies are in agreement and are encouraging this. Just today we had a hearing with the Housing, Community Development and Insurance Subcommittee, and Mr. Montgomery, who is the head of FHFA, was there. I will be visiting with him. He and I agreed to have an appointment so that we can talk about these things and see what we can do to help with homeownership for persons who were not born in the suites of life and many who now find themselves living in the streets of life.

This is something that is an imperative. It is a moral imperative. It is something that we have to do because we want to have a just society, and a just society would afford an equal opportunity to all to have a place to call home. In the richest country in the world, every person ought to have a fair opportunity to have a place to call home.

I thank the gentlewoman for allowing me to share, and I encourage her to continue on her mission to bring justice to those who find themselves living in places that, quite frankly, most people in Congress would not live in under any circumstances, but, unfortunately, we are not doing enough to help others to be extricated from the circumstances of which we speak.

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