10:40 AM EDT
Chris Dodd, D-CT

Mr. DODD. Mr. President, first let me thank my colleague from Alabama, Senator Shelby. He makes it sound like Methuselah this morning referring to those years we have served together in the Senate, combined years of service. I have been a member of the Banking Committee since my first day as a Member of this body in January of 1981. I have served under and with a lot of different people on that committee, going back to Bill Proxmire of Wisconsin, who was the ranking Democrat in those

days; Jake Garn, who was the chairman of the Banking Committee in 1981, the Senator from Utah. Over the years, Senator Riegle, Phil Gramm, and Paul Sarbanes, of course, chaired the committee, as well as, of course, Senator Shelby.

This is an important moment for this body. We have a severe housing crisis in the country. I don't need to keep repeating that. All Members recognize it. When we go home and talk to our constituents, as we did over the last week or so, we see that this problem is not going away. We were hoping that somehow the market would be taking care of all of this and by now we would be seeing that proverbial light at the end of the tunnel, but the only light we see is the light of a train coming. Unless

we act promptly, we are looking at a situation that will only get worse.

Our legislation is not the salvation of every problem. I wish to make clear to my colleagues that what Senator Shelby and I and the other 19 members of our committee have done is to fashion some proposals that we think will make a significant contribution to the issue, maybe the most important one being a sense of optimism and confidence that this Congress of ours, despite the narrow margins that split us as two parties in this body, can actually work together to get something done.

There is a growing fear in the country--in fact, more than growing--that we are incapable of doing much here; that we can't seem to get much done because of the partisan divide. This bill argues strenuously against that conclusion. By a vote of 19 to 2, this committee marked up this piece of legislation.

We have now been on the Senate floor debating this because of the very difficult parliamentary situation we are presented with as a result of what the House of Representatives sent us, so we have spent this much time on this legislation. However, I think we have a very good product reflected by the votes that have occurred over the last several weeks. I think the lowest vote total on any single proposal that has been either offered or suggested has been something like 77 votes, showing that an

overwhelming majority of people are supporting this committee product, and we appreciate that as members of the Banking Committee.

So this action is coming none too soon. Today the RealtyTrac reported that over 250,000 families went into foreclosure in the month of June. That is a 53-percent increase over last year. We all throw these statistics around rather easily in this Chamber, but numbers, while staggering, are faceless and nameless. Behind every one of these numbers, that 250,000, that 53-percent increase, is a mother, is a father, is a family, and children whose lives have been unalterably changed for the worse because

they are going to lose their home. They are going to lose their home.

Just imagine, if you will, those who have not been in that situation, what it would be like to wake up this morning and know that you have a foreclosure notice on your home, that you can't meet your obligations and you have to face your children, you have to face your spouse, you have to face your coworkers, and you have to find some other place to live. Mr. President, 250,000 people went through that in the month of June, 1,500,000 over the last year, and we are still here debating this bill

and whether we can do anything to make a difference in people's lives.

What is happening today is a tragedy, a significant tragedy for these people, for their neighbors, for their communities, and for our country. The cover story in this week's issue of Business Week is entitled ``The Home Price Abyss: Why the Threat of a Free Fall is Growing.'' I think the article sums up very well the threat we are trying to address with this legislation.

Let me quote from it:

The risk to the financial system and the economy is that the price drop, which is already horrifying, will start feeding on itself.

It goes on to say:

When home values fall low enough, hard-pressed homeowners become less able or less willing to keep paying their mortgages. That forces lenders to repossess homes and then dump them back on the market at fire sale prices, which depresses further the prices in those neighborhoods and leads to even more foreclosures.

When we consider the role home equity has played in supporting consumer spending, we can see that this vicious cycle can create a disaster. We have already had hundreds of thousands of job losses and the like. I think we all recognize we have a responsibility to act.

Today, we have an opportunity to pass the Housing and Economic Recovery Act of 2008, which will help us begin to address this crisis and the larger economic turmoil. I wish to add that we would have liked to have considered other amendments. Other colleagues had ideas to add to this bill. Because of a handful of Members who don't want any more consideration, we are forced into this situation. A number of amendments had been worked out between Democrats and Republicans, but we cannot even offer

those. That is the situation. I regret that because there were some good ideas, frankly, that could have been added to the bill as it leaves here. But that is the situation. Candidly, we cannot wait longer, having gone weeks going through the parliamentary rigmarole on the floor of the Senate.

I will sum up again the legislation we are about to pass and send on to the House. The bill establishes the Hopeful Homeowners Act to assist at least 400,000, maybe 500,000 families to keep their homes and stabilize their neighborhoods. It does so after asking both lenders and borrowers to make financial sacrifices. It does so at absolutely no cost to the taxpayer. It creates a new class of regulation for Fannie Mae and Freddie Mac.

You can look in the Wall Street Journal of this morning if you doubt whether we should act or we can wait longer. The headline is: ``U.S. Mulls Future of Fannie, Freddie.'' If you think we ought to wait longer to try to get something better out of the bill, consider what we may have happen to these GSEs, which are critical to providing stability in the housing market. The world-class regulator, which is something we tried to do over the last 7 years, is finally done in this bill on a bipartisan

basis. Recent news makes it clear these entities need a strong regulator to ensure they are viable and healthy institutions.

The bill raises the loan limit from $417,000 to as high as $625,000, so the GSEs can play a more active role in stabilizing the housing market. I wish to point out that this loan limit is considerably higher than what was included in the committee-passed bill. Senator Shelby, to his credit, and I agreed to do this in an effort to accommodate the interest of the other body, the House. And also the people who live in higher cost States, the higher numbers will be important for them to

get relief as well from the bill.

Treasury Secretary Paulson said passing this legislation is the most important thing we can do to address the housing crisis. The bill modernizes the FHA program, raising the loan limit from $362,000 to $625,000. The FHA proved its value in the current crisis. It continues to be a stable source of mortgage credit, while many other lenders have failed. This bill will make sure FHA is available to even more American families.

To give you some idea of how this affects people, by raising these limits to the $625,000 level from $417,000, we will now cover 85 percent of the American population and 98 percent of the counties in America. The other 2 percent are the very high-cost counties. My [Page: S6520]

State has one of them, and several other States across the country do as well. But 85 percent of the American people are potentially covered by this bill, and 98 percent of the counties will

be covered by the numbers we have raised from $417,000 to $625,000. When people tell you we are not reaching enough, we have reached about as far as you can reach if you are interested in helping those who may face more serious problems.

The bill includes a permanent affordable housing fund, financed by Fannie Mae and Freddie Mac, that will provide tens of thousands of affordable housing units in the future. Let me say, about this part of the bill, the GSE reform will be long lasting and important. The HOPE for Homeowners Act is temporary; it doesn't exist after 3 or 4 years. Maybe the most important thing we will do is the affordable housing issue in this bill. No new tax money required. The money will come out of the GSEs.

We know, as a matter of fact, that we have built very few affordable housing units in this country over the last number of years. And particularly those people losing their homes will have a hard time finding rental units. This is a permanent bill on affordable housing, and there is a means to pay for it without adding to the taxpayers' costs. It is one of the most important long-lasting features of the bill. In the long term, that bill will make a huge difference for millions of people.

Seventeen million people today spend half their disposable income on their houses. If you are on SSI, in fact, housing costs exceed the monthly benefits you get today under SSI. For millions of people in this country, that affordable housing provision can be very important in the long term.

The bill includes a new protection for elderly homeowners taking out FHA-insured reverse mortgages so they are not deceived into using the proceeds from the loans to buy expensive and needless insurance products. These are provisions that were incorporated by Senator McCaskill, and we thank her for it. There is a new mortgage broker and lender licensing requirement that was added by Senator Martinez and supported by Senator Feinstein from California. That will begin

to address many of the abuses of the mortgage process that have been perpetrated by brokers.

In addition, the bill includes improved disclosure requirements that were added by Senator Reed of Rhode Island and Senator Bond of Missouri as well. Because of the effort of Senators Kerry, Coleman, Akaka, Cornyn, and Sanders, the bill expands the availability of VA housing programs. It includes a number of provisions to help returning veterans save their homes from foreclosure and provides new housing benefits to disabled vets as well.

In an amendment adopted on the floor prior to the recess, we added language by Senator Kohl of Wisconsin to create protections against foreclosure scams, and we reduced paperwork burdens on certain small public housing authorities, thanks to the amendment by Senator Sununu.

This legislation includes $3.9 billion in emergency community development block grant funds. This is a controversial provision. I know some Members have raised concerns about it. I think all of us recognize that when we talk about a national crisis, with problems of foreclosures having a devastating effect in our States, obviously, resources locally, with property taxes declining for police and fire, and the like, our mayors and county officers are finding themselves further hard-strapped to

meet their obligations. We thought an infusion of community development block grant money, targeted specifically to those communities that face high foreclosure rates, would be of benefit to them to help them rehabilitate their communities and the foreclosed homes and get them back on the market. This is still in the bill.

I have been warned by Members of the other body that this provision will have to come out. I know some Members want to strike it. It is going to stay in the bill that is going to the other body. They object to it because they don't have a pay-for in it, and we do here. We call it emergency funding, as we do when we have hurricanes or other natural disasters occurring. This is similar to a natural disaster. If you are one of those 250,000 families who, in the month of June, lost their homes--whether

by flood or by hurricane, believe me, it is a disaster. They lost it because they got lured into deals they could not afford or because there was a scam or deceptive practices going on. Don't try to tell that family

they have not faced a disaster. It is not a natural one, but nonetheless it is a disaster. The idea that we cannot provide additional funding to mayors and county executives to help out communities is something I am troubled by. It may come out of the bill when it comes back. I urge them to look hard at this and try to find a funding source.

I ask unanimous consent for an additional 5 or 10 minutes.