The Confirmation Process

Floor Speech

THE CONFIRMATION PROCESS -- (Senate - April 01, 2008)

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Mr. DURBIN. Mr. President, this Senate is an institution which was central to the decision to become a Nation. I have been watching this John Adams documentary on HBO--I recommend it to everybody--talking about the earliest days of America. This great Constitution which guides our Nation almost didn't happen but for a compromise which said that even the smallest States would at least have two Senators, the same as the largest States. On the Senate floor that tradition continued, allowing even minorities, small groups, and even individual Senators certain rights which are not afforded to those across the Rotunda in the House of Representatives.

One of these is a filibuster where Senators can take to the floor and can hold the floor, objecting to what is going on. It takes an extraordinary vote--a large vote, more than a majority in the Senate--to take the floor back from that single Senator or group of Senators and to proceed with business. These filibusters have stopped what are so-called ``cloture motions,'' closing down the debate and moving on with business. It takes 60 votes for a cloture vote. In other words, 60 Senators have to agree to stop a filibuster and move forward.

In the history of the Senate, the record number of filibusters for any 2-year period of time has been 62--62 filibusters in a 2-year period. Last year, the Republican minority broke that record, smashed that record by initiating 62 filibusters in 1 year. Sixty-two times the Republican minority stopped our efforts on the floor of the Senate to move forward to try to change things in America--62 times.

The Republican Party is known as the Grand Old Party--the GOP. It turns out that when it comes to Senate Republicans, GOP stands for Graveyard Of Progress. That is what they are trying to make the Senate.

On February 28 we brought up a measure here to deal with America's housing crisis. Is it a serious issue? Is it something the Senate should take the time away from our wonderful patriotic speeches and try to address? I think it is. More than 2 million Americans face foreclosure. In my home State of Illinois, we are facing record numbers of foreclosures. In States such as Nevada and California and all over the United States, foreclosures are at record numbers on mortgages of homes.

Is it an important issue for more than 2 million families? It is. Because when a home goes into a foreclosure and is sold at lower than fair market value, it affects the value of the homes in the neighborhood. So when they ask you: What is the value of your home, Senator Durbin, in Springfield, IL, you say: Well, let's look and see some of the recent sales in his neighborhood--comparable values, as they call them. If, around the block, one of my neighbors has lost a home in foreclosure, that has a negative impact on the value of my home. So 2 million mortgage foreclosures have a ripple effect across the housing economy and diminish the value of 44 million homes, 22 homes for every home in foreclosure. One says: Well, 44 million homes in a nation of 300 million people, it is still not that big a deal, is it? It is. Forty-four million private residences reflect one-third of all of the private residences owned in America. Two million mortgage foreclosures and one out of three homeowners who dutifully make their mortgage payments every single month without a problem see the value of their home go down. In fact, we are seeing a rising number of people in America holding a mortgage on their home at a value that is higher than the actual value of their home. They are under water, as we say. They have a debt, a mortgage, which is greater than the value of their home.

This has an impact on our overall economy. Over 70 percent of the people in America today, when asked if they will buy a home, say no. You say: Is that because you can't find a mortgage for your home? They say: No, I can find a mortgage. I just don't think it is a good investment.

Think about that statement. For as long as I have been around, a home was always your best investment. I can remember when my wife and I stretched and squeezed and sacrificed to get our first home, how proud we were. We weren't sure we could make those monthly payments. It was a stretch to do it. But we knew it was the right thing for our kids, for our family, for our neighborhood, and for ourselves, because a home is going to go up in value. At least that was the theory until recently. Now homes are going down in value and people are not buying. Homes sit vacant, not only foreclosed homes but other homes where people are trying to sell them to move on to a different location or to a better place. You see the signs all over America: For Sale, For Sale. It is a reminder that the housing crisis which brought us into this recession is still very much an issue today.

On February 28, the Democratic majority said to our friends on the Republican side: Let us act as Senators.

Let us deal with an issue that has relevance to today's economy and to families all over the Nation. We have a plan. We have a proposal, a housing stimulus package, with four or five key points in it which I will mention in a moment. We want to bring that bill to the floor and we want our friends on the Republican side--and even Democratic Senators if they wish--to offer amendments about housing so their best ideas can be considered.

What I have described sounds dangerously like the tradition of a deliberative body such as the Senate; we would actually take an important American issue, bring it to the floor, debate it, open it to amendment, do our best to come up with something that will pass, match what the folks do in the House of Representatives, and maybe end up with a law--a law that can strengthen our economy. That is the normal way we do business--or at least normal until this Republican minority came to power.

What happened on February 28? Well, we needed about nine Republicans to join the Democrats so we could move forward in the debate. Only one stepped up, so we didn't have enough votes. So the housing stimulus package died on February 28. The Republican minority refused to even debate it. They wouldn't even bring it up on the floor. Nothing was going to stop them from offering relevant amendments to this housing package. They didn't even want to have an opportunity to offer those amendments. They didn't want the debate.

I think I know why. They are doing their best to make sure that this Congress, under the Democrats, ends up in the same position as the previous Congress, under Republicans, of doing nothing about the issues that count for America.

But we are not giving up. We are coming back today. In about 20 minutes we will break for lunch and after that, we will come back for a vote on the floor and we will try to return to this housing stimulus package. We will give the Republicans a chance to join us. I say to my friends on the Republican side who may be watching this on C-SPAN in their offices or other places: Don't be afraid of a debate. Don't be afraid of amendments. Isn't that why we ran for office, to address the important issues facing America, to debate the merits of a good idea or a bad idea, and to take a vote to be on record. If we are going to run away from an issue as central to the economy as the housing crisis, we are becoming irrelevant. It is little wonder that the approval rating of Congress is as low as it is when the Republicans continue to filibuster, continue to stop us from even debating something as critical as the housing crisis facing America.

So what does the bill do? The basic bill we are talking about here does several things in an attempt to reduce foreclosures. One of the first is to make an investment in more counselors. It has to be a scary moment when you receive that letter after you have missed your mortgage payment that says you are now in default. You are facing foreclosure. We can take your home away from you. Some people go through a period of denial. They won't look at the mail. They won't answer the phone. They hope it will all go away. But it won't. It gets worse. Others wisely say: I need to talk to somebody. How did I get into this mess? How can I get out of this mess? The people available to talk to them are counselors who sit down and say: OK, don't panic. Do you have an income? How are you doing otherwise? Do you have a lot of debt? Maybe we can call the bank. Maybe we can find a way to change the terms of your mortgage so you can stay there.

These counselors are valuable. In fact, they are invaluable to deal with this mortgage foreclosure crisis. So one of the first things we do is to put more funds into counseling so there are people available to help those facing mortgage foreclosures.

We expand refinancing opportunities so that if you can't make it on your old mortgage--let's say you have what is called an ARM, an adjustable rate mortgage, and let's say it has hit its reset point--1 year, 3 years, 5 years--and now you have a new interest rate and your monthly payment shot up so high you can't make it. So what are you going to do? Well, in this bill we set up some refinancing opportunities across the Nation so that people who have an income, who are responsible, who want to keep their homes, have a chance.

We also provide to communities funds through the Community Development Block Grant Program to purchase foreclosed properties. People ought to see what I have seen repeatedly on the west side of Chicago, over by the United Center where the Chicago Bulls play basketball. There is a great little area on the west side just getting a start that has been rebuilding neighborhoods that have been kind of beaten up for a long time with nice homes. Smack dab in the middle of these nice homes is this boarded-up home, with trash in what used to be a nice front yard. It looks awful. Right next door to it live two families who clearly care about their homes, and there sits that foreclosed home smack dab in the middle. It is up for auction. When it goes up for auction, it is not likely to even get fair market value, and it is going to hurt the value of all of the other homes in the neighborhood.

One of the things we try to do is offer communities some funds to step in on foreclosures before that house is abandoned and run down in value and hurts the whole community. We also expand a carryback period for businesses, particularly to help those in the housing industry who have had a rough go of it kind of weather the storm so they can survive.

Jack Reed of Rhode Island, my colleague, passed the Truth In Lending disclosure requirement for real estate closings.

If you have ever sat through a real estate closing, you know there are a stack of papers like this, and they turn the pages and say: Keep signing. And in 20 minutes you walk out the door and say: What the heck did I just sign? Senator JACK REED wants to have a cover sheet that has the basics on it so everybody initials it and signs it so they know their interest rate, what the term of the loan is, how much they are borrowing, if the interest rate can change, what the monthly payment is, what it could be--the high and low points--and is there a penalty for prepayment--basic things, so they don't walk out in a mystery as to what they just signed.

Then there is a provision I have in there which the mortgage bankers hate like the devil hates holy water. Why do mortgage bankers hate this provision? First, let me introduce you to this group. The mortgage bankers were the industry that brought us this mess of subprime mortgages.

They were the ones who started peddling mortgages that made no sense, convincing people who were caught off guard, or deceived, saying: Oh, of course you can afford this home; these are interest-only payments. Don't worry about it. Just look at the monthly payment, don't worry about it. And, listen, when it is supposed to reset and the payment goes up, you come back to me and I will refinance it. You know these homes will keep going up in value forever.

A lot of unsuspecting people signed on to these mortgages. Some of them were elderly, and most of them were without advanced degrees in finance, and some were duped into this by come-on deception advertising. But the fact is, they signed on for the so-called subprime mortgages.

Well, those are the folks who are going through trouble now. There are about 2.2 million of them. About one-third of them will end up in Bankruptcy Court. They will go into chapter 11 where you walk in and say to the judge: I am making an income, I am not out of work, but I have all these debts. Under chapter 11, the bankruptcy judge can start restructuring your debts, try to find a way through the mess so that at the end of the day you can get it back together again. About one-third of the people facing foreclosure will be in that position.

Now, let's assume you walk into that bankruptcy court and you have a number of things you own. I will give you some examples; some are unusual. You own your home, you own a ranch, a vacation condo, and you own a yacht. I know most people don't own yachts, but let's use this example. Maybe it is just a big boat. What can that bankruptcy judge do when it comes to what you owe? Well, he can take your ranch and modify the terms of the mortgage. He can take your vacation condo in Florida and modify the terms of the mortgage. He can take your yacht, or big boat, and modify the terms of what you owe on your yacht.

What about your home? No way. The law says the bankruptcy court cannot modify the terms of your mortgage on your home. It is prohibited by law. What is that all about? This is a graphic illustration of a yacht--and I don't know any Senator who owns one. But here is a yacht and here is a home. The bankruptcy court can renegotiate the terms for the yacht but not for the home. My bill says you will have a chance to renegotiate the terms of your home, but there are strict limitations.

First, this doesn't apply to everybody. You have to have an existing mortgage, not anything that you could enter into at a future date. Second, it has to be a home, not a property you bought for speculation. Third, you have to qualify to go into bankruptcy court. Fourth, when they modify the mortgage, they cannot lower the principal below the fair market value of the home. Many foreclosure proceedings don't end up at fair market value. Fifth, the interest rate they can impose on the new mortgage cannot be anything less than the prime rate, plus a premium for risk. Sixth, if the home you have refinanced goes up in value in the next 5 years, the bank, the lender, gets the increase in value. You are protecting the lender on both ends--no lower than fair market value and any increase in value goes to the lender.

Now, the mortgage bankers, God bless them, say this is the end of Western civilization as we know it. If these people are able to stay in their home under these circumstances, interest rates will go up all across the country. The Georgetown Law Center said this:

Taken as a whole, our analysis of the current historical data suggests that permitting bankruptcy modification of mortgages would have no or little impact on mortgage markets.

I have talked to these bankers. This doesn't make sense. Unregulated, unsupervised, without oversight, they dragged us into this mortgage crisis with millions of people and their homes on the line, and our economy is teetering on recession, the values of homes across America are in peril, and now they will not even allow us to help these families who will end up in bankruptcy court.

I would like to have a vote on that. I would like to ask my friends on the Republican side of the aisle to, at 2:15 or 2:30, have a vote on this issue. If you don't want to fight fires, don't be a firefighter. If you don't want to cast a vote on an important issue in America today, don't run for the Senate. If you want to be in the Senate and be part of this national debate, for goodness sakes, vote to proceed to this bill. Let's not litter this graveyard of filibusters with this important housing stimulus bill.

I urge my colleagues to vote for the motion to proceed.

I yield the floor.

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