Frank Holds Hearings on Housing-Aid Bill
ROBERT SIEGEL, host:
In Washington, most Republicans and Democrats want to do something to help the roughly two million Americans facing foreclosure. The question is: What?
The White House has proposed modest steps to deal with the crisis, and Congress wants to go its own way or ways.
NPR's Brian Naylor reports.
BRIAN NAYLOR: It's only a slight exaggeration to say there are as many different plans in Congress to deal with the housing crisis as there are congressional committees. The House Financial Services Committee chaired by Massachusetts Democrat Barney Frank held its first hearing today on Frank's proposal. It would give the Federal Housing Administration authority to help homeowners refinance their mortgages with FHA-backed loans.
Frank noted what he called the remarkable coincidence that on the eve of the hearing on his bill, the White House announced it would let the FHA do much of what Frank is calling for on a more modest scale. He then tangled with Federal Housing Commissioner Brian Montgomery over whether the administration's plan would put taxpayers on the hook for rescuing subprime mortgage holders.
Representative BARNEY FRANK (Democrat, Massachusetts; Chairman, Financial Services Committee): Does that not expose us to greater risks than we were before you announced this program?
Commissioner BRIAN MONTGOMERY (Federal Housing Authority): Look, there were borrowers who had no-doc loans, low-doc loans...
Rep. FRANK: Mr. Montgomery…
Commissioner MONTGOMERY: …many of them…
Rep. FRANK: …please just answer my question. I…
Commissioner MONTGOMERY: …many - I'm just saying, sir, many…
Rep. FRANK: No, you're not.
Commissioner MONTGOMERY: …were not qualified.
Rep. FRANK: Does this change, which expands the eligibility, waive some of the objections on default? Does it expose us to people who are riskier than previously we'd taken into the FHA program?
Commissioner MONTGOMERY: Yes, yes, sir. It does.
Rep. FRANK: It does? Thank you...
Commissioner MONTGOMERY: Yes.
Rep. FRANK: Okay. That's the answer. So, I think that's - I appreciate you doing that. I think it's appropriate.
NAYLOR: Meanwhile, the House Ways & Means Committee gave bipartisan approval to a proposal by chairman Charlie Rangel, a New York Democrat, to give tax credits to first-time home buyers with incomes up to $70,000.
While Rangel hopes to stimulate the housing market by helping people with modest incomes buy a house and Frank hopes to help people with modest incomes stay in the ones they already have, the Senate is taking a different approach. Its bill is weighted heavily - too heavily, say critics - toward tax breaks for home builders.
Pennsylvania Republican Arlen Specter says it does little for those struggling to make their mortgage payments.
Senator ARLEN SPECTER (Republican, Pennsylvania): This is not half a loaf, this is a crumb. This bill is a crumb.
NAYLOR: Republican Judd Gregg of New Hampshire was similarly harsh in his criticism of the measure, saying it amounted to a taxpayer bailout of home builders.
Senator JUDD GREGG (Republican, New Hampshire): I mean, they were greedy. They built a lot of homes that the market didn't need. They sold them to people who couldn't afford them. Then they took all that profit and they used it. But, unfortunately, they had to pay taxes on that profit. So, now they want their taxes back, and they want the American people to subsidize them on that.
NAYLOR: But defenders of the Senate plan said there was another way of looking at it. Montana Democrat Max Baucus said the measure would help blue-collar workers keep their jobs.
Senator MAX BAUCUS (Democrat, Montana): These are people with hammers and nails going out building houses who are no longer building any houses and they're laid off. So, this bill, basically, on that one provision - respect to home builders, kind of evens things out a little bit.
NAYLOR: The Senate bill's bipartisan supporters were surprised yesterday when the White House announced it had some problems with other provisions in the bill, which press secretary Dana Perino said would do more harm than good. But, as Perino noted, the Senate measure is unlikely to reach the president's desk in its current form. House leaders clearly favor their approach to the crisis, targeting homeowners and buyers rather than builders.
Brian Naylor, NPR News, the Capitol.
NPR transcripts are created on a rush deadline by a contractor for NPR, and accuracy and availability may vary. This text may not be in its final form and may be updated or revised in the future. Please be aware that the authoritative record of NPR’s programming is the audio.