New Direction for Energy Independence, National Security, and Consumer Protection Act and the Renewable Energy and Energy Conservation Tax Act of 2007--Motion to Proceed
Floor Speech
NEW DIRECTION FOR ENERGY INDEPENDENCE, NATIONAL SECURITY, AND CONSUMER PROTECTION ACT AND THE RENEWABLE ENERGY AND ENERGY CONSERVATION TAX ACT OF 2007--MOTION TO PROCEED -- (Senate - April 01, 2008)
BREAK IN TRANSCRIPT
Mr. MENENDEZ. Mr. President, a month ago I came to the floor to speak on behalf of America's homeowners. Since then, tens of thousands of families have lost their homes. Since then, we have been watching home prices fall, we have been watching foreclosure rates skyrocket, and we have been watching tens of thousands of Americans lose their jobs.
In my home State of New Jersey, over the next 2 years, we expect more than 57,000 homes to be lost to foreclosure. That means 57,000 families who will have to hand over the keys to their home, 57,000 families who will be forced to say goodbye to the place where they were nurtured and comforted, a place where they lived during good and bad times, places they came home to every night, a place they celebrated birthdays and wept over losses.
In the words of families, we know what it feels like to lose their home. They will feel as if they have lost everything.
Nationwide, the number of foreclosures that is going to happen if we don't act is unfathomable. Two million American families are in line to lose their homes over the next 2 years, and everyone stands to lose from foreclosures. Lenders report losing tens of thousands of dollars on each foreclosure. Neighbors see the value of their own homes drop. When we see that 63,000 Americans lost their jobs a month ago, when we see weak earnings reports from businesses, wild swings in the stock market, and the collapse of a major firm on Wall Street, we can see this housing crisis is truly shaking the entire economy to its core. It clearly has a major ripple effect.
We all know at the heart of this economic downturn is the housing crisis. So the question is: How long are we going to watch before we realize it is time to take action?
I marvel when a year ago this past March I said at a Senate Banking Committee hearing that we are going to have a tsunami of foreclosures and the Bush administration said: Oh, no, that is an overdramatization. I said then: I hope you are right and I am wrong. The reality is, we have not even seen the crest of that tsunami take place.
Not only did they say it was not real, but they refused to act in any meaningful way. But when it was clear that a major investment bank on Wall Street was in trouble, the Bush administration rushed to the scene like firefighters responding to a five-alarm blaze with $30 billion put up to ensure that JP Morgan Chase could buy Bear Stearns.
Regardless--and we will be reviewing both the propriety and the way and the standards that were used to pursue that, whether that is the appropriate standard, the way Bear Stearns ultimately was priced--a full year into the subprime mortgage crisis, they have done nothing but hit the snooze button on the alarm as millions of Americans have watched their dream of home ownership go up in smoke.
It is time we react with the same urgency and seriousness, no matter if the people who are in financial trouble are occupying a suburban home in Madison or a rowhouse in Newark or Camden.
I hope today finally there is a glimmer of hope for homeowners who have been left to fight this battle alone. It is clear that Members on both sides of the aisle have gotten the message that it is time to act. And it is clear what our goal has to be: helping families keep their homes and in doing so helping our economy, which affects all of us.
I am pleased that we have made what seems to be an important breakthrough in the Chamber. I have the utmost faith in Chairman Dodd and Ranking Member Shelby that they understand the urgency at hand, that they will do their best to put forward a workable solution we can all support, and I certainly hope it is one I can support as well.
I strongly support Majority Leader Reid's bill as it is. I understand the nature of compromise and negotiation, so I know it will change, but I hope that bipartisanship will not mean we will stray far from providing the direct assistance that homeowners need--to stop foreclosures.
Here are a few key steps the final bill has to take. First, we need to provide funding for counseling in order to reach families at risk of losing their homes. Many American families--I saw it during the recess when we were working back in our States--many American families are sitting around their kitchen tables looking through their mortgage bills, their finances, and, yes, their bank notices, and they don't know where to turn. They don't know exactly what to do. It is not as if they have a pot of money sitting in the bank. They do not. They are trying to keep it together, keep their families together, keep their hopes and dreams and aspirations together. These counselors could offer them real solutions and options to avoid receiving that foreclosure notice or, even worse, foreclosure itself.
The Reid bill puts forward $200 million to make sure counseling reaches those who need it the most, and I think that is incredibly important.
Secondly, we need to provide funding to allow communities with high foreclosure rates to access community development block grants. Communities can use these funds to purchase foreclosed properties for rehabilitation, rent, or resale. Having a foreclosed home sit abandoned in a community does not benefit anyone. This is one of the key points I always make when I talk about this issue because a lot of people say that is not about me. I got the right mortgage; I am paying for it; this is about some people who made the wrong choices, and I don't want to pay for their wrong choices.
The problem with that is, first of all--and I will talk about it in a moment--people were led to choices where maybe they did not have financial literacy, maybe they didn't have the wherewithal to fully understand the nature of what they, in many cases, were being misled into--a mortgage product in which they should never have been.
Even looking at it in that respect, the bottom line is it affects us all. Why? Because a foreclosed home that sits abandoned in a community does not benefit anyone. It decreases surrounding home values and it can attract crime and vandalism. The bottom line is that foreclosures destabilize neighborhoods. The funds in this bill allow communities to stop that death spiral before it starts.
Some argue that stepping in to help our communities recover from the housing crisis would somehow be a blow to the concept of personal responsibility because some homeowners, as I said, made bad choices in signing up for subprime mortgages.
First of all, let me say, don't get me wrong, personal responsibility is important, and that is why we need greater support for homeowner education, for foreclosure counseling, and financial literacy so anyone thinking about buying a home will be able to understand the terms of their mortgage, even the fine print, and have the tools to protect themselves.
What I have a problem with, as I listen to so many in the Chamber, is it seems that personal responsibility is always talked about as it relates to the consumer. Personal responsibility is not just important for homeowners, however. Every participant in the life of a loan needs to step up and take real responsibility and action.
What got us to where we are today? In my mind, unbridled free market extremes, excesses without appropriate regulation or without the attention of regulators has brought us to where we are.
I believe in the free market, but when it is unbridled, this is what happens. Every broker, lender, realtor, every appraiser, regulator, credit rating agency, and investing firm needs to make changes if we have any hope of quieting the storm and not reliving it. The time for blame games is over. The time for action has come.
Third, I hope this body looks carefully at a provision that can help more than 600,000 families stuck in bad loans keep their homes. I know some of my colleagues are very concerned about this provision which would give judges in bankruptcy proceedings the discretion to modify loan terms. But the fact is, this provision is very narrowly tailored, it is a one-time limited fix, and in the end it is a win-win not only for borrowers but lenders alike. This provision alone would help over 14,000 families in my State of New Jersey avoid foreclosure. That would be a savings of about $5 billion in home values alone. My good friend Senator Durbin has done an excellent job at hammering out a compromise, and I hope my colleagues will give it careful consideration.
It is interesting, under the existing bankruptcy law, if you happen to have the good fortune of having a second home, a vacation home, a leisure home, guess what. The bankruptcy judge can go ahead and change your financial obligations on that home, but the very essence of the American dream, which is the home in which you live, to raise your family, to go through good and bad times, no, that cannot be renegotiated. What an interesting set of values. For a leisure home, we can go ahead and a bankruptcy judge can change the terms, but for those who were sucked into a subprime mortgage who should never have been in those types of mortgages and for which the regulation was not there to ensure there was transparency and ensure there was oversight, oh, no, we cannot touch that. In a place that talks so much about values, I don't understand that set of values.
As we in the Congress debate how best to help homeowners, how best to end the housing crisis and how best to get this economy back on track, we have to see the bigger picture. There is a lot at stake. No matter who you are, no matter whether we have a subprime mortgage, no matter whether we are making our obligations meet or whether we are finding ourselves in distress, we are all in this together. When the house next to ours gets boarded up, it affects the value of our property, too, and how safe we feel walking around our neighborhood at night. When that value goes down, it reduces the equity we have in our home upon which we can borrow to put our kids through college, to take care of an uncovered medical bill or emergency, or even for the resources we will have for our retirement. No one is immune.
So this sense of personal responsibility, yes, but understand that we all have a stake. When a neighbor of ours has to declare bankruptcy and is forever saddled with debt they cannot pay, they shop less at our stores, purchase fewer of the services our community offers, and, obviously, the more foreclosures we see in a neighborhood, property values decline. When those property values decline, rateable bases go down--and that is the way municipalities ultimately receive their resources which means, what? Either taxes have to go up to cover existing services of police, firefighters, education, whatever, or we cut the services. We are all in this together.
When a nonprofit organization in Jersey City is close to finishing the building of its new arts center so it can give kids an opportunity to do something productive after school and stay away from gangs and they cannot get the last bit of money they need because of this credit crunch and housing crisis, it affects us all.
Dr. Martin Luther King reminded us that ``we are all tied in a single garment of destiny'' and that ``we cannot walk alone.'' This is a crisis we are all in together as a nation.
And there is no reason we can't all work together to end it. It is in America's interest to do so, and I hope the Senate, which has shown a moment of a possibility of what can be done, seizes that moment on behalf of our fellow citizens but also on behalf of our collective interest, on behalf of our economy, and, in doing so, on behalf of our Nation.
Mr. President, with that, I yield the floor.
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