NSP Termination Act

Floor Speech

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Mr. SCHWEIKERT. Mr. Chairman, look, I've been a Member now of this august body for 75-some days. And I'm starting to learn much of what we do seems to be more based in theater than reality.

If I read this amendment correctly, what we're trying to do here is add language that basically says, well, we could repair neighborhoods with the last billion dollars. Of course it didn't happen with the previous money.

But think about it, if we take a step back. What's the money been used ultimately for? It's been used to bail out lenders. In many ways this is another back-door bailout to the very folks that my constituents are furious with, and handing them more government dollars in the name that, well, this time we passed the cash to those lenders, but this time we did it through local governments.

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Mr. SCHWEIKERT. Madam Chairman, on this Richardson amendment, it's interesting because I always like amendments that are trying to do something technical. But where I'm finding actually sort of a problem in the flow of logic is--think about this: We have a neighborhood stabilization program down to its last billion dollars, we've already spent what, 6 billion? And the concept written in this amendment is saying that, well, it's going to keep acquiring one, two, three to four units, fourplexes, properties, and it's going to keep acquiring them until a certain number of mortgages are--only this percentage are underwater, or the mortgage value is greater than the value of the house. Does that seem like I'm going in the right direction?

Ms. RICHARDSON. Fairly.

Mr. SCHWEIKERT. But here's the classic problem in the design of that. If the Neighborhood Stabilization Act does what I think it does, it's either a municipality, a nonprofit, this and that, buying a property, sometimes rehabbing it, sometimes removing the boarded-up windows, sometimes just buying a property and competing with the private investors and the first-time home buyers in that neighborhood and then turning around and putting it back on the market.

Well, if one of our problems out there is we have a glut of properties on the market, and that's one of the things holding down our values, and I'm going to continue to support a program that's going to drop another billion dollars buying properties and then putting them back on the market. We have a circular logic here where I can't imagine the mechanics within this, well meaning as they may be, actually have any basis in economics or particularly real estate economics.

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Mr. SCHWEIKERT. Madam Chair, first, this is one of those few moments I get to stand behind the microphone; and I say, having met the good woman from California, she has actually been very gentle to me as a freshman, so far.

But one of my concerns here is very, very simple: there is $6 billion out there. And I won't call it a slush fund. Back in my days as Maricopa County Treasurer, we would call it a revolving fund. There is $6 billion out there already that goes out, and if the property is sold, comes back; and that I believe operates for 5 years from the enactment of the bill.

Well, a letter like this goes out and says, Oh, well, the last $1 billion isn't going to be there for you, but please keep using the $6 billion you already have to go do more good works in the neighborhood.

My great fear is something like this doesn't really accomplish much good.

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Mr. SCHWEIKERT. Madam Chairman, I am pleased that we're actually accepting this amendment, because if we get an honest study from it, it could be some very interesting numbers. But I hope it's an honest study that also looks from top to bottom. Such as in the Neighborhood Stabilization Program in the previous $6 billion that has been spent, what crowding out has it done? What first-time homebuyers, what investors, found themselves competing with government? It would be interesting to know.

Also, we keep hearing the numbers of saying, well, with our government money we created this many jobs. How many jobs were being created if they were private investors or first-time homebuyers or other families that were acquiring the same sort of properties and fixing them up? If we're going to get like for like, it will be fascinating.

Then we also have to deal with the reality of it as we saw in the previous amendment. In that amendment, it was claiming there were about 1,061,000, we'll call them vacant units in the country. Okay. If we start doing the math with the remaining billion dollars of additional money, how much impact does that have? And will the study also step up and say, with the $6 billion that's out there that's supposed to be acting like a revolving fund, 5 years from the beginning of this program, which was what, last summer? How is that money being used? How much velocity is it really getting? Or is it now sitting in houses that are competing with other neighbors who are trying to sell theirs.

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