Wall Street Reform And Consumer Protection Act Of 2009

Floor Speech

Wall Street Reform And Consumer Protection Act Of 2009

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Mrs. CAPITO. Madam Chair, I would like to speak in opposition to the bill, but I would like to talk about the manager's amendment as well.

But before I get into the manager's amendment, I would like to reinforce my opposition to the bill in its entirety because of the permanent bailout fund that is created, the continuation of bailouts, the implied government guarantee in the financial marketplace, and the way that taxpayers are placed on the hook potentially for billions, if not trillions, of dollars to bail out failed nonbanks.

But specifically I would like to talk about the two parts of the manager's amendment that were added without specific discussion by the committee, to my knowledge, and it also goes to a larger point. We've labeled this bill TARP II. This goes back to TARP I and using TARP funds to fund things that the TARP money was not intended to go for. I voted against the TARP funding in the first place. And now in the manager's amendment we have another $4 billion in existing TARP funds going to unproven foreclosure relief programs; $3 billion to reinstate a 1975 program, the Emergency Homeowners' Relief Act, to provide emergency mortgage relief.

We just had a hearing in our committee this week on the Making Homes Affordable plan, the administration's plan, that in our opinion, I think, across the board in a bipartisan way is a bust. It has not met with much success, and it has murky, if uncertain, guidelines attached to it. So I think in this case strapping an unemployed homeowner with more debt is not the answer. Congress needs to support policies that create jobs and do not perpetuate any more bailouts.

The other part of this amendment adds another $1 billion for the Neighborhood Stabilization Program. This program is a costly bailout for lenders and speculators. This program also could have the unintended consequences of making foreclosure a more attractive option for lenders, thereby compounding the problem.

We've already committed in two separate times $6 billion to the Neighborhood Stabilization Program, and this adds another billion. I think we also need to consider that this program of the $4 billion allocated to it in 2008, only 25 percent of the funds are even out the door. What is adding another billion dollars going to do and when can those funds actually get out the door? And of the $1.9 billion allocated in January of 2009, not one dollar has made it through HUD's cumbersome bureaucracy.

I object to the fact that this was added onto the manager's amendment on a very complicated, thousand-page bill, but it also adds two additions on here that I believe were part of the reason that the bill has been held up through this week and part of the reason it was held up yesterday; it was to satisfy certain interests in this House, and I think we need to have them discussed in front of the whole committee and discussed in front of the whole House.

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Mrs. CAPITO. Madam Chair, the gentlelady's amendment deals with the Making Home Affordable program, which has been in effect for most of 2009. I think it is important to note that the Department of the Treasury is already collecting some of this data. But I would like to take this opportunity to express my continued concern, as the gentlelady expressed hers, with the loan modification programs in general.

Earlier this week, the House Financial Services Committee held a hearing in which there was bipartisan frustration with these programs. Rolled out under heralded proclamations that they would help 7 million to 9 million struggling homeowners, to date the loan modifications have helped only a fraction of that.

I have serious concerns that the administration has overpromised on these programs and has unfairly raised borrowers' expectations. Furthermore, we have learned that many of the trial modifications are not being processed with complete documentation. Lack of documentation was one of the main contributors to the foreclosure problem in the first place.

JPMorgan Chase recently disclosed that in November close to 25 percent of their trial modifications failed to make the first payment, and that nearly 50 percent of the borrowers failed to make all three of the first three payments. Furthermore, the Federal Reserve Bank of Boston cites that 30 to 45 percent of borrowers who receive modifications end up in default within 6 months.

Clearly, we need more transparency in this program. We also need to find a way to make the goals of the program work to help those who are having difficulty--who are suffering from unemployment or from the real estate collapse in their areas or who are unable to meet their obligations. All of us hear from constituents every single day who are struggling, but this program, Making Home Affordable, obviously has great lapses and great challenges.

With that, I reserve the balance of my time.

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Mrs. CAPITO. Madam Chair, I would like to say facts are facts. We are, unfortunately, suffering some of the highest unemployment in a generation. These are real people who are losing real jobs, and we want to help them in their housing issues. I support the gentlewoman's amendment.

I would like to say that, in our hearing, we learned that the servicers and the banks were having some lapses, but we found also that the borrowers were having some lapses as well in terms of providing full documentation, in terms of responding to the lenders and to the servicers.

So I would encourage the gentlewoman, as we move through this process, to maybe expand the transparency of the information so that we can see the full program not just from the servicer's side or from the bank's side but also from the borrower's side, too, and see where their lapses may be as well.

With that, I yield back the balance of my time.

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