Press Conference with Senate Majority Leader Harry Reid; House Speaker Nancy Pelosi (D-CA); Senate and House Democrats

Statement

Press Conference with Senate Majority Leader Harry Reid; House Speaker Nancy Pelosi (D-CA); Senator Christopher Dodd (D-CT); Rep. Barney Frank (D-MA); Senator Charles Schumer (D-NY); Rep. Carolyn Maloney (D-NY); Rep. Stephanie Tubbs (D-OH)
Subject: An Offer of a Plan to Stem the Tide of Home Foreclosures

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SEN. REID: To the American people, it's never been clearer how detached from reality President Bush is. One only needs to look at the bills he's vetoed: stem cell research, giving hope to millions of Americans; changing the course of the war in Iraq, giving hope to millions of Americans; SCHIP, legislation that will help millions of children --

SPEAKER PELOSI: Somebody leaned against the light.

SEN. REID: There we go.

SEN. SCHUMER: That's better. (Laughter.) The lights are going out on George Bush's veto. (Laughter.)

SEN. REID: -- and SCHIP, which gives hopes to millions of children and their parents. As said so clearly last week by little Graham Frost, he doesn't know how the president sleeps at night.

We're here today to talk about another problem we have in America today, and that's foreclosures of homes. In Nevada, we have a significant problem. As everyone knows, we've had a building boom going on in Nevada, especially southern Nevada, for two decades. But we've found, interestingly enough, that 25 percent of the homes are being foreclosed upon in Las Vegas are homes to people who are being foreclosed upon don't live in the houses, are speculators.

What we're here to work on today and to explain today does not deal with the speculators. It deals with people who buy homes and want to keep those homes, and that's what this is all about.

This is a national crisis. It's too bad it's taken so long to realize we've had a crisis. The Federal Reserve has had more than 15 years to see a problem developing, and they simply didn't react when they should have. That's why Democrats demand the president join us in a few simple procedures we think will help a lot: Increase funding to prevent foreclosures, modernizing the FHA to create more options for subprime borrowers looking to refinance, temporary lifting portfolio caps on Fannie Mae and Freddie Mac to fuel the mortgage market, and finally, appointing a federal coordinator to oversee the federal government's response to this crisis, just as he did in response to Hurricane Katrina.

And it's my pleasure to welcome to the Senate again my partner and friend, the first woman speaker of the House of Representatives, Nancy Pelosi.

SPEAKER PELOSI: (Laughs.) Thank you, Senator Reid -- Mr. Leader. I thank you for reminding all those gathered here today of that historic first, but it does bear on the issue that we're dealing with, and that is the security of America's families.

Today our country faces a challenge that threatens the economic security and the dream of home ownership of many of America's working families, the subprime lending crisis. The number of foreclosures reported in August was more than double than the same time one year ago. This past August alone, 240,000 -- 240,000 American families faced the heartbreak of losing their homes.

At the same time, our broader housing market is in the worst slump than it has been in 16 years. This means fewer jobs and a decline in the value of a family's greatest asset, their home. The foreclosures are not in the mere interest of lenders, certainly not in the interest of the homeowners and not in the interest of their communities. What does more to stabilize a community than home ownership, putting down roots, investing in that home, investing in the community around? So the strength of America in terms of the strength of our communities and our families is ill-served by ignoring the subprime crisis. We are not doing that.

There's an opportunity for the lending institutions to do much more to help the more than 40 percent of families with subprime mortgages that are eligible for lower fixed-rates. Yet according to a recent survey of 16 prime lenders -- subprime lenders, only 1 percent of consumers experiencing higher interest rates had their mortgages renegotiated. The subprime crisis demands action, and we are working to protect families who have lost their homes or in danger of foreclosure and instituting reforms to prevent other subprime problems.

Senator -- Leader Reid went into some of the initiatives; I'm not going to do that, because I'm going to -- we're going to hear from other members from the House. I'm very proud of the leadership of Barney Frank as the chair of our Financial Services Committee; the chairwoman of the Housing Subcommittee, Congresswoman Maxine Waters; and the vice chair of the Joint Economic Committee, Congresswoman Carolyn Maloney, whom you will be hearing from momentarily.

But first I'm pleased to yield to the distinguished chairman of the Banking Committee in the House (sic/Senate), the committee of jurisdiction on this issue, a person who has been a champion for America's working families in his entire career, Chairman Chris Dodd.

SEN. DODD: Thank you. Thank you very much. Well, thank you very, very much, and it's a pleasure to be with Senator Reid, our Democratic leader, majority leader, and Speaker Pelosi, colleagues in the House and Senate, Senator Schumer, Barney Frank, my counterpart in the House, and members -- Maxine, good to see you; Carol as well; Stephanie, thank you, as well, for your presence here.

Let me just add my thoughts to this as well as chairman of the Senate Banking Committee. We're facing, obviously, a serious meltdown in the subprime mortgage area. In fact, the crisis, in my view, is sort of the equivalent of a 50-state Katrina occurring house by house, home by home, devastating families and obviously putting incredible pressure on communities as well. As Speaker Pelosi has pointed out, nothing does more to stabilize a neighborhood, a community to provide wealth creation, security, long-term financial security and home ownership.

It's been the dream of so many people, and to watch this collapsing for as many as 2.2 million families in this country as a result of the failure of the administration to pay attention to this issue as it was emerging more than three years ago -- well, we now know from Federal Reserve staff that they were aware of this problem growing a number of years ago and did not step up, needless to say, did not take action on legislation passed some 14 years ago by the Congress, the HOPA legislation, which required them to promulgate regulations that would deal with abusive practices in this area, have contributed significantly to the situation we're facing today.

And the fact that the administration's been so slow to react to this issue -- it's now taken weeks and weeks and weeks for them to recognize the magnitude of this problem and to step up and to take some very specific actions. As the speaker pointed out already here, despite the efforts -- we some six months ago held a meeting of share -- or stakeholders, rather, in this issue here. We received commitments from them that they would begin immediately to have workouts for individuals who were caught into this morass. According to Moody's assessment of what's happened over the last six months, less than 1 percent of home owners have received the kind of support and backing that they ought to be receiving here.

So the problem is significant, it's growing. There's a great risk of this spreading out even further in the economy. In addition to providing, of course, the kind of security and wealth creation and stability that home ownership does, it's a critical component of our economy, and the fact that we're watching this collapse occurring around us raises some serious larger issues as well.

The steps that have been talked about here, I think, are tremendously important, and that is we need to get the administration to continue to work here so that the lenders here, the servicers, will do everything possible to make it possible for the majority, I think, of these people who are caught in this situation to have a workout occur so they can stay in their homes. We need far more support than we're getting from them on that score.

Secondly -- and we've already worked on this, and I comment Senator Schumer of New York and others -- we have some $200 million that we can actually provide. We want the president to sign this into law to provide some relief for people here.

Here's a pool of money which can be used to help these people work out their loans.

And thirdly, as has been mentioned again already here, the FHA legislation, which we've marked up out of committee, and I know the leader will try and provide some space and time for us. I think we marked it up almost -- I think there was one dissenting voice, Leader, in the Senate Banking Committee on the FHA legislation. So it's prepared to move when you can find the time for us to deal with it, like to bring that up and urge the president to sign it into law.

And finally, of course, we need to do everything we can here to prevent this problem from reoccurring. And so we're working on legislation to deal with some of these other issues here that are critically important.

But first and foremost, we need the administration to step up here, to deal with the portfolio caps, which they can do, they don't require legislation to do that; to weigh in with us here to see to it that these lenders and services will provide the kind of relief that's available under existing laws and legislation.

We need leadership out of the White House. We need leadership out of this administration. Nothing will do more in the short term to provide the kind of hope that these people deserve than get the leadership from the White House on this question. So we look forward to their support on these matters.

Let me turn now to my colleague and friend Barney Frank from the --

SPEAKER PELOSI: As Barney approaches the podium, though, I want to -- thank you, Senator -- to acknowledge the presence of two members from Ohio, which has been particularly hard hit, Congresswoman Stephanie Tubbs Jones, who's working with Chairman Rangel to provide the permanent tax relief for -- (inaudible word) -- homeowners, and Congressman Zach Space, who has been a leader on this issue in our new class coming into the Congress.

Mr. Chairman.

REP. FRANK: Thank you, Madame Speaker, Leader Reid and colleagues.

First, it is a legitimate question people have asked, "Why did Congress not act?" And I want to give the straightforward, honest, nonpartisan answer: Because the Republicans were in control and they didn't want to do that. Mr. Oxley just put out a statement, to his credit, regretting that he hadn't acted.

In fact, in 2005 Congressmen Brad Miller and Mel Watt of North Carolina, where that law had been enacted, began conversations with Spencer Bachus, now the senior Republican on the committee, then chairman of the Financial Institutions Subcommittee, I participated as the ranking Democrat, and we were negotiating a bill. The bill wouldn't have been everything we would have liked, but it would have been a bill.

The Republican leadership sent word -- the Republican House leadership sent word to Mr. DeLay, "No action." So we would have acted well over a year and a half ago, at least, and a lot of these loans that are now going bad would not have been made.

And the problem is that I think we now have a recognition that two things that had been detested by the kind of Republican fundamentalism were needed. One is reasonable regulation, and what Chris Dodd talks about us doing going forward is absolutely essential.

We have had loans made, mortgage loans, by regulated institutions, banks. That is not where the subprime problem arose. The subprime problem arose when an unregulated group of originators made loans and then sent them into the unregulated secondary market. And we are going to do sensible regulation. And when people say that's going to kill the market, the fact is, when your market problem is a lack of investor confidence, sensible regulation is the best way to restore that investor confidence, so we are going to move ahead on that.

Senator Dodd is also right that we've been disappointed that there has not been more renegotiation. We have done everything possible through the regulators, through the Financial Accounting Standards Board and elsewhere to encourage people who hold these mortgages to recognize that it is not in their own economic interest to foreclose. Owning a lot of vacant property is not good for them. Better to let people refinance and do these workouts.

Now, we are going to have, we hope, the FHA and Fannie Mae and Freddie Mac readily available to help with those, but we need the people who hold the paper to be more flexible. And I intend to continue and to follow up with the work of Senator Dodd. I think it's time for us to call them together again and say, we have given them all the tools for these workouts; it is important that they do it.

I do want to make one point. When people have said, well, why are you helping out these people who were imprudent? The victims of widespread foreclosure are not simply those on whom the foreclosures occur. Predatory loans were not randomly geographically distributed. Working people in a lot of neighborhoods, who were making their payments, are the victims of widespread foreclosure, because their property is being devalued. Vacant homes with people stripping the copper out of their neighborhoods isn't very good.

Going forward, we need to do all those things that were said, the money that Senator Schumer and others put in. And we should be clear: That's for housing counseling. We're not talking about buying up mortgages or bailing out lenders but we do think housing counseling is very important, so that people can take advantage of these opportunities.

Beyond that, passing the legislation for the FHA and, I must say also, for the GSEs, so we can do a number of things, is very important. Because what we want is a balanced program going forward, where we help people who are currently in trouble; we pass legislation to make it less likely that they'll be in trouble. And we also, and I think this is very important personally, particularly, add to the affordable housing stock. Part of the problem has been that people haven't, in that income category, had sufficient choices for housing, and I think the total package is there.

And it's now my pleasure to introduce my former seatmate for many years, in both the Judiciary and Banking Committees before he graduated, Senator Schumer. (Laughter.)

SEN. SCHUMER: Yeah, reminds me of Barney's remark when the speaker of the Assembly, who was my mentor in New York State, Stanley Fink, came to my swearing-in ceremony to go from the Assembly to the Congress.

He said, "Now the intellectual caliber of both bodies will rise.

Anyway, I'm glad to be here. And I want to thank all of my colleagues, Senator Reid and Speaker Pelosi, for taking leadership on this vital issue; vital issue to homeowners who are caught, but vital issue to our entire economy. The fact that Speaker Pelosi and Leader Reid are adding their important voices to the growing chorus of lawmakers, advocates, economists and homeowners looking for solutions to the subprime mortgage crisis is vital.

I want to thank Chairman Dodd for his leadership on this issue, which has been unstinting, as well as Chairman Frank, and thank my colleagues. I'm head of the Joint Economic Committee, and our vice chair is Carolyn Maloney, my partner in New York. I'm also subcommittee chairman of the Housing Committee, and I'd like to thank Maxine Waters, who is my colleague in the House there, as well as members from Ohio, Congress members Tubbs and Space, for being here.

Despite all the reassuring statements we've heard from the administration that the impact of the crisis would be, quote, "contained," it's not been contained but has been a contagion that has spread to all sectors of the economy and all regions of the country. And unfortunately, we know the worst is yet to come. Unless we act, 2 million families could lose their homes before the next year is over, and that could reverberate throughout the markets -- the prime market, the mortgage market, the commercial paper market and the whole economy.

This crisis, unfortunately, is not over, not only for the homeowners who are caught, but for everybody else. From February, when we and many economists identified this subprime debacle as a brewing storm, until now, the administration has largely kept its head in the sand. Month after month, as more families received foreclosure notices, more empty homes pile up on the market, construction starts to drag, job growth has stalled, values of homes go down, hurting the whole economy, and then the overall economy starts to sputter, the administration has remained in a state of denial.

Today we're here to ask the administration to step up to the plate for once and do the right thing, to act decisively and quickly to help families protect their main source of wealth and prosperity and prevent the subprime mortgage crisis from dragging our entire economy down with it.

First, the administration should remove its ideological blinders and temporarily lift the portfolio caps imposed on Fannie Mae and Freddie Mac. The GSEs are the best hope for providing liquidity. When you have a homeowner who is a prime borrower, who could refinance, you have two things missing. You have money for the mortgage and you have somebody to help them work it out. Because as Barney mentioned, a bank is no longer on the scene. There's no one to help them, and none of us could do this ourselves.

So the first step to get the money is the GSEs. That's the logical and natural place. The administration provided a minuscule cap of relief two weeks ago, and the GSE regulator has suggested he may remove the caps altogether in February. We're standing here today together and saying, "Mr. President, February is hundreds of foreclosures" -- I'm sorry, "Mr. President, February is hundreds of thousands of foreclosures away."

The time to act with sensible, targeted policies is today, not months from now. And my view, if the administration does not act, Congress should act on the legislation -- now -- that I introduced to temporarily lift the limits on Fannie and Freddie's mortgage portfolios by 10 percent. That'll free up $145 billion for the purpose of new prime mortgages.

The legislation requires that 80 to 100 percent of the financing be dedicated to refinancing borrowers who are stuck in risky adjustable rate mortgages. And that would do a world of good.

The administration should do it on their own; if not, we have to act and should act. Targeting the borrowers that are likely to default in the months ahead will not only save homes, but will help strengthen the broader credit markets and economy as a whole.

And second, the administration must work with Congress to increase the resources for foreclosure prevention. There are hundreds of dedicated nonprofit groups standing at the ready who can help the hundreds of thousands of people work these things out and refinance their mortgage. That's what would have happened in the old days when a bank held the mortgage. There's no bank; the only person to step into the lurch is somebody from a nonprofit, and that's what we have to do.

My colleagues and I, as has been mentioned -- Senator Dodd, Senator Bond, myself, with Senator -- Patty Murray's great help on her subcommittee -- have appropriated $200 million toward foreclosure prevention to date. Our counterparts in the House are committed to adding to this critical funding stream, but we need the administration to help us find more resources. Foreclosure prevention is highly effective. Look at the map. This is just a chart. If you prevent -- to prevent foreclosure is $1,500; to prevent -- to do foreclosure is $227,000. That's the big difference, okay? Why not spend it. And then, compare it to, say, how much the total cost would be to the cost of the war in Iraq. One day of the war in Iraq is almost double all the money we've put in to help hundreds of thousands of families not foreclose. It seems to make logical sense to me.

It's now my pleasure to call on my colleague, Carolyn Maloney.

SEN. MALONEY: Thank you. Thank you so much, and I thank all of my colleagues, and particularly the Democratic leadership, for moving forward and working hard to help families, first of all, stay in their homes and prevent another crisis like this from happening in the future.

Parallels have been drawn between the subprime crisis and the Katrina crisis. During Katrina, we lost 300,000 homes, but as Senator Dodd said, we predict at least 2.2 million people may lose their homes.

And the response from the Bush administration has been slow and small. The foreclosures have spiked nearly 115 percent since this time last year, and expectations are in the next 18 months it will get even worse.

The collapse of home prices that we see might turn out to be the most severe since the S&L crisis and the Great Depression. And the worsening housing slump, the credit crunch and weak consumer confidence point to a gathering storm that could drag down the economy, taking thousands of American jobs with it.

In the House, under the leadership of Speaker Pelosi and Chairman Frank, we have already passed reforms to the FHA bill, to have new incentives for workouts to help people stay in their homes. We've passed GSE reform. And we have also taken actions to work with the FASB to clarify its standard 140 rule allowing for modification of a loan when default is reasonably foreseeable, not just after default.

But as Senator Schumer said, if there was ever a time that we should be calling upon Fannie and Freddie to provide liquidity in the market to help people stay in their homes, it is now. The numbers speak for themselves: $1,500 to help someone stay in their homes; the impact on the community, much, much, much more. And we need to pass that 200 million (dollars), get it to the not-for-profits, who are strapped. They're working to people stay in their homes. We need to help them do that.

When you compare it to Iraq, the numbers speak for themselves: 200 million (dollars) compared to 330 million (dollars) a day.

So we are working hard to respond to this crisis, and we are calling upon the Bush administration to give the same attention to the subprime crisis that affects many, many more that they gave to Katrina: appoint someone in charge to manage this; provide liquidity in the GSEs; sign into law immediately the FHA, once it passes; and work with us to help Americans stay in their homes.

REP. (D-CA): Thank you very much. I'd like to thank the Democratic leadership, Speaker Pelosi and Majority Leader Reid, for focusing on the crisis in the subprime market and its increasing impact on the domestic and global economy.

Let me start by noting that the foreclosures jumped by 36 percent in the month of August, compared to July. This strongly suggests that we remain in the worst -- before it gets better -- phase of this crisis. As has been the case since its onset, the impact, while nationwide, has not been equally distributed across the country. My home state of California is at the epicenter of the foreclosure wave. Nearly 58,000 households in California were in some stage of default during the month, representing one in 24 homes, as compared to one in 334 homes in July. Of the 10 cities with highest foreclosure rates in August, six were in California; Detroit, Cleveland, Fort Lauderdale and Las Vegas, who complete the list of the worst-hit metro areas.

But California is by no means alone. The Rust and Sun Belts have also been hard hit. Speaking personally, earlier this summer, I did visit Ohio, which had the third-highest total of foreclosures in August, and observed the shocking impact of some neighborhoods where literally block after block revealed houses boarded up due to foreclosures.

You've heard from my colleagues here today, both in the House and in the Senate, about how bad this crisis is. And I know a lot of people are wondering: How did it get to this point? Why didn't somebody do something?

This administration must take responsibility for not having the regulators warn us about what was going on. These regulators are charged with the responsibility for auditing, for understanding what the financial institutions are doing. We should have been warned that they were exploding interest-only loans; no doc loans, meaning no documentation; the loans that were being advanced to people, and they didn't even know what their income was.

In addition to that, the teaser rates and the teaser loans that were given that are now resetting -- and many of the borrowers are now in a position where their mortgages will double, triple or quadruple, and they certainly cannot afford it.

And so this subprime market has crashed, and we need some answers.

We are thankful that the president noted that we had already introduced an FHA bill that we passed out of my subcommittee, out of the full committee under the direction of Mr. Frank, and onto the floor and sent over to the Senate. The information that he shared with the American public about his response was basically all in the FHA bill.

We're reforming FHA because the subprime market had literally with all of these exotic products taken away what the FHA would normally be doing, providing the insurance for these mortgages. And so now FHA is in the position where it can do some refinancing and help people save their homes, but we built into that legislation serious counseling so that the home owners would certainly be given the kind of counseling they need so that they would not fall into this kind of situation.

And so, I'm very thankful for this opportunity to be with both sides of our government here today to talk about getting involved in ways that will save homes for American taxpayers.

REP. FRANK: Thank you. I note we are joined also by one of those who have been most active on the committee in the House, our colleague, Mr. Ellison, Keith Ellison from Minneapolis.

And we will now be available for questions and comments.

Q Madame Speaker, before you leave, can you just tell us what your strategy is now that the president's actually vetoed the SCHIP bill, and whether -- (off mike)?

SPEAKER PELOSI: I would have hoped that the questions would have focused on the subject at hand, but because I do have to leave, with the permission of my colleagues, I will address this issue.

It's very sad that the president has chosen to veto a bill that would provide health care for 10 million American children for the next five years. It is a value that is shared by the American people across the board. In fact, 2 to 1 Republican voters support SCHIP and oppose the president's veto.

I'm very proud of the bipartisan vote that we had in both the House and the Senate. Salute Senators Hatch and Grassley for their courageous leadership, and can say to you that we'll work very hard to try to get the 15 Republican votes in the House. We're working with 43 governors, bipartisan, Democrats and Republican governors alike, who support SCHIP. We're working, again, in a bipartisan way in both houses to override the veto. Organizations from AARP, AMA, to YWCA, alphabetically and everything in between, Catholic Hospital (sic/Health) Association, the Families USA, every organization you can name that cares about America's children are hard at work advocating for an override of this veto.

Hopefully, we will be able to do that. I know the Republicans are making it a priority to go down with the president on this issue. I think that the president will find himself isolated on it, and whether we override or not, we will continue to send legislation to the president's desk that will insure these children.

I don't think the president wants to say to the American people that he, as the decider, self-proclaimed decider, wants to decide which child in America has health care and which child does not.

So I promise you a vigorous fight. We'll probably take up the bill in two weeks. We'll have legislation on the floor. As soon as we receive the paperwork from the White House, we'll make a determination. But we'll probably take up the bill in two weeks to override the veto.

Q Speaker Pelosi -- (off mike) -- surtax that Chairman Obey presented yesterday?

SPEAKER PELOSI: (Off mike) -- here's what I think about that. I have opposed the war from day one, as you know, because the intelligence did not support the threat. Put that aside for a moment.

I put the surtax in the category of the draft. Of course, you cannot conduct a war without shared sacrifice and the support of the American people. It is clear by the reaction to the draft and to any tax that that shared sacrifice is not there. The president has not called for it. And so I don't support a draft and I don't support a surtax and I don't support the war.

Democrats, instead of the 10-year, $1 trillion commitment of tens of thousands of American troops, again, over 10 years and into perpetuity -- that's the president's plan. Democrats are calling for a responsible and safe redeployment, to begin as soon as possible and to end within a year, to have a very minimal force in Iraq to protect our embassy, to fight al Qaeda and if it's necessary to train any Iraqi security forces, to do so out of country and in an international way. That's what the difference is between us -- a 10-year commitment of tens of thousands of troops or a redeployment out. I do not support the surtax.

Thank you.

Q Do you think you can get 15 votes on SCHIP? Or are the opponents to the expansion really dug in on this one?

SPEAKER PELOSI: Well, we shall see. Because as I say, they're hearing from their churches; they're hearing from the community activists who are involved with working with children. It's going to be a hard vote for Republicans to take. I know, no matter how they vote, many of them are very, very uncomfortable about having to make this choice, of sticking with the obstinance of the president on this issue and -- or voting for America's children.

I'm still praying for the president. I tell him I always pray for him. I'm praying harder that he signs this bill. He said, your prayers aren't being answered. I said, I haven't finished praying. So we shall see what this will bring, but I do -- I suppose we've gotten the word now that the president has vetoed the bill. Hopefully we will have the votes to be there to make this the children's Congress instead of the president's opposition to health care for America's children.

I really have to go now. Thank you all very much.

REP. FRANK: From the standpoint of some of my Republican colleagues, there's sometimes a thin line between being dug in and being buried.

(Laughter.) And I think they're going to have to feel their way through it. We'll now take questions on the subject at hand. Yes?

Q Did you consider a moratorium on raising interest rates? As the resets come along, have you considered any type of moratorium?

REP. FRANK: We cannot violate contract. I mean, if the question is were we to do that legislatively, it's -- there's a constitutional issue. There are rules against the abrogation of contracts. There's also -- people have talked about foreclosure. Foreclosure is mostly a state law matter, though we do have a bankruptcy aspect here. So simply mandating that runs into all manner of constitutional problems.

What we believe should be done is, people have the authority who hold the paper, the mortgages, to adjust the terms. The bank regulators have made it clear that the banks have that. The Securities and Exchange Commission, working with Financial Accounting Standards Board, has made clear that those who are servicing the secondary market have the authority to do that. It is very likely to be in the interest of the holder not to foreclose and be stuck with a lot of vacant property and worry about how you keep it and fight all those legal battles. They are much better off taking some loss and allowing a refinancing.

And we are urging them to do that voluntarily. We cannot constitutionally, I believe, compel them to do it, but we're going to step up. We've made it possible for them to do it. We've made it clear, and we've got the regulators -- SEC, Financial Accounting Standards Board, the banks -- to make it clear they can do it. Now we need to put the pressure on them to make sure that they do do it.

SEN. SCHUMER: Barney, let me just -- I just want to add something to what was said there. If you look at who the subprime borrowers are, the people who are in trouble, 50 percent would merit getting a prime loan. They're just duped. They have the income, but they would do -- most of them refinanced their home, it wasn't even a new home. Those are the key people who can be helped here.

And with the rather modest solutions that we have suggested -- money for the nonprofits to do it, and some money from Fannie and Freddie to provide for those mortgages -- this can be done at a savings, at a dramatic savings. The problem is not the economic problem, that you need a freeze in interest rates. You don't. The problem is, you don't have anybody on the ground helping them, because there is no bank, and the mortgage companies are off in the sunset.

REP. FRANK: I would add -- Ms. Tubbs Jones wants to talk. The point that Senator Schumer made is very important about people who shouldn't be there. In Boston, thanks to the Home Mortgage Disclosure Act data which we got as a result of a bill that my former colleague Joe Kennedy put through, if you were a black, upper-middle class resident of the city of Boston looking for a mortgage, you were more likely to ge a subprime mortgage than if you were a white person of much lower income. So an element to this has been the race issue because the Home Mortgage Disclosure Act -- and that's one of the things that both committees are also working on.

Congresswoman Tubbs Jones wanted to say a word.

REP. TUBBS JONES: A couple things. I come from Ohio -- Cleveland, one of the largest areas where the high foreclosures are. And another thing that's not being talked about is that when you have this many foreclosures, then you have an impact on the tax (duplicate ?) of a county. And the county then faces a dilemma with getting Moody's approval because they haven't collected all the taxes for that particular area, and it often makes it difficult for them to get money for other issues.

The other thing that we need to focus on is, even as we go through this process, we have to be careful that these lenders don't get caught up with another predator, because just as people watch TV and they say, "I can help you take care of your credit, improve your credit," there are those same hawks out there saying, "If you're in a foreclosure situation, I can help you out of that foreclosure situation," and they end up in another predatory situation. So we need to pay attention to that, as well.

REP. FRANK: Yes, very important. We've been working with the League of Cities and HUD. People who hear these ads -- well, there are people who are now trying to come up and bottom feed and buy up the homes of the people in distress. People should not sell.

Any other questions? Yes.

Q You've all said that the administration has been slow to act, especially on lifting the Freddie and Fannie -- (off mike) -- caps. But you haven't come out and said today that you will therefore do it definitely. Is there a date by which --

REP. FRANK: Well, in the first place, there is no need to do this statutorily. The caps that we are talking about were imposed by the regulator and could be lifted by the regulator. He lifted them a little bit, but not enough.

With regard to raising the -- the so-called jumbo mortgages, the amount on an individual mortgage, that's statutory. But the caps could be raised by administrative authority. They exist because the regulator, OFHEO, put them on.

But Senator Schumer is talking about a bill. And I've been reluctant to pass legislation piecemeal because we want to get the GSE bill through because we want to reform the regulation of Fannie and Freddie and we want to create an affordable housing fund, that Ms. Waters and I have worked on, and raise the caps and raise the (jumbo ?). It all works as a package, along with the FHA bill.

But I'm prepared now, as Senator Schumer is talking about a one- year temporary increase in the portfolio primarily dedicated to refinancing -- buying up the refinanced subprime, and yes, we would entertain that in the House.

Now, what the administration will do I don't know, but we are ready to do it. It doesn't have to be done statutorily, but we will do it if they don't move.

Q Do you have day -- is there a day to which you'll say now we need to do the bill because --

REP. FRANK: Well, Senator Schumer's ready, I think, at this point. As soon as the Senate does it, we'd be ready to do it. The phrase "as soon as the Senate does it" does not come trippingly to the tongue. (Laughter.)

Other questions?

Yes?

Q Did you agree with -- sorry. Chairman Bernanke said that if this is to be done, it should be done by early in the spring, like March or April --

REP. FRANK: (Inaudible) -- yes, I think the sooner the better. One, you know, the chairman takes a kind of macro look; we also look at the micro look. And on that, can I make -- I want to make a very important point.

As I said, one of the things that we have been proven right on -- you know, I know people say, oh, I don't like to say I told you so, but I find it is one of the few pleasures that improves with age, so I do it. And we told them in 2005 we needed legislation, and then we told them earlier that the free market alone can't do this. The market is a wonderful instrument and securitization has been helpful, but it needed both appropriate regulation and some institutional support, and a year ago, they were saying no to both. Now there is an acknowledgment; the president said it just before Labor Day. You need the FHA, a federal agency. You need Fannie and Freddie, quasi public institutions with a public mandate. You need regulation.

And so, part of the problem is people who have said -- criticized Alan Greenspan, and some people who said, well, he created the stock bubble, he let this bubble go; and they criticize Bernanke because he didn't raise interest rates -- that's a false choice. The notion that the only way you can prevent these abuses is to cause a recession and the whole economy or deflate the whole economy is wrong. Sensible regulation is what you need.

And so we do have an acknowledgement by the administration, including Chairman Bernanke, who's agreed with us, that some regulation on the secondary market is relevant. People now understand that, along with a capitalist integrative market, you need updated regulation and some institutional support.

Thank you all.

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