Chris Dodd on Budget & Economy Democratic Sr Senator (CT)

Federal budget much more complicated & diverse than states’

RICHARDSON: Well, as a governor, I have to, by law, balance budgets. I’ve balanced five. And it would be a major priority of mine.

DODD: Well, listen, the federal government’s much different than a state government, I say respectfully to Bill Richardson here. It’s much more complicated and diverse. I’ve been a strong supporter, authored, in fact, pay-as-you-go budgets back in the early 1980s, which failed. I was a strong supporter of Gramm-Rudman, which is designed as well to inject some fiscal discipline into the process. So we need to have an economy here that’s driving to growth, creating jobs, which is the best social program anyone ever created. And then, simultaneously, bring an end to the war in Iraq, & begin to put that discipline back into our process. But the national government is a very different entity than a state government; requires a lot more flexibility to it.

Freeze rates on subprime mortgages to avoid foreclosures

A: It is. In fact I made the recommendation about a month ago to the administration, and I’m glad to see they are picking up on it. I thought this would help everybody here. If you freeze the “teaser rates”--those rates they drew people into these subprime mortgages on--that would be a good idea. And this way, the homeowner can stay there, maintain at least some payments without losing their home and going into foreclosure. And obviously the lending institution or those that hold the mortgages would get something other than zero. So it looks to me a good solution here that would provide everyone with some relief.

People of color lured into sub prime lending

A: I think it’s a pretty good idea. In fact we made a similar suggestion. Freezing that rate would allow a couple of things to happen. One, people stay in their homes. But also the financial institutions, they’re better off getting 3-4% back than nothing whenever foreclosures occur. [Furthermore], I’m trying to make sure this doesn’t happen again. This was outrageous what went on here. There were no cops on the beat in this administration--they basically walked away from this and you have three times people of color in this country are being lured into sub prime lending.

Chairs Banking Committee; hedge fund managers donated $727K

A: It hasn’t been killed at all. In fact, I haven’t come out even in favor or opposed. Look, there’re unintended consequences to these actions. Having some idea of capital formation of the country, having a pro-growth Democrat that cares about these issues: What happens to endowments? What happens to retirement accounts? What happens to pensions? As chairman of that committee, the responsible answer is, let’s examine this.

Mortgage market has seized up; provide more market liquidity

A: Yes, I think it will happen [soon]. But we also need more liquidity. And they ought to be allowing Fannie and Freddie Mac to put more liquidity in the market. It has seized up. You can’t get a mortgage in America today.

The next generation may be less well-off than us

Voted YES on $192B additional anti-recession stimulus spending.

Congressional Summary:
• $7 billion Increase in Fund balance appropriation (without fiscal year limitation).
• With respect to the Unemployment Trust Fund and to the Black Lung Disability Trust Fund: Removes the FY2010 limitation as well as the specific dollar amount for such advances, replacing them with such appropriations as may be necessary.
• Increases from $315 billion to $400 billion the maximum loan principal for FY2009 commitments to guarantee single family loans insured under the Mutual Mortgage Insurance Fund (MMIF).
• Increases from $300 billion to $400 billion the limit on new Government National Mortgage Association (GNMA or Ginnie Mae) commitments to issue guarantees under the Mortgage-Backed Securities Loan Guarantee Program.

Proponent's argument to vote Yes:Rep. LEWIS (D, GA-5): This bipartisan bill will provide the necessary funds to keep important transportation projects operating in States around the country. The Highway Trust Fund will run out of funding by September. We must act, and we must act now.

Opponent's argument to vote No:Rep. CAMP (R, MI-4): [This interim spending is] needed because the Democrats' economic policy has resulted in record job loss, record deficits, and none of the job creation they promised. Democrats predicted unemployment would top out at 8% if the stimulus passed; instead, it's 9.5% and rising. In Michigan, it's above 15%. The Nation's public debt and unemployment, combined, has risen by a shocking 40% [because of] literally trillions of dollars in additional spending under the Democrats' stimulus, energy, and health plans.

We had a choice when it came to the stimulus last February. We could have chosen a better policy of stimulating private-sector growth creating twice the jobs at half the price. That was the Republican plan. Instead, Democrats insisted on their government focus plan, which has produced no jobs and a mountain of debt.

Voted YES on modifying bankruptcy rules to avoid mortgage foreclosures.

Proponent's argument to vote Yes:Rep. PETER WELCH (D, VT-0): Citigroup supports this bill. Why? They're a huge lender. They understand that we have to stabilize home values in order to begin the recovery, and they need a tool to accomplish it. Mortgages that have been sliced and diced into 50 different sections make it impossible even for a mortgage company and a borrower to come together to resolve the problem that they share together.

Sen. DICK DURBIN (D, IL): 8.1 million homes face foreclosure in America today. Last year, I offered this amendment to change the bankruptcy law, and the banking community said: Totally unnecessary. In fact, the estimates were of only 2 million homes in foreclosure last year. America is facing a crisis.

Opponent's argument to vote No:

Sen. JON KYL (R, AZ): This amendment would allow bankruptcy judges to modify home mortgages by lowering the principal and interest rate on the loan or extending the term of the loan. The concept in the trade is known as cram-down. It would apply to all borrowers who are 60 days or more delinquent. Many experts believe the cram-down provision would result in higher interest rates for all home mortgages. We could end up exacerbating this situation for all the people who would want to refinance or to take out loans in the future.

Rep. MICHELE BACHMANN (R, MN-6): Of the foundational policies of American exceptionalism, the concepts that have inspired our great Nation are the sanctity of private contracts and upholding the rule of law. This cramdown bill crassly undercuts both of these pillars of American exceptionalism. Why would a lender make a 30-year loan if they fear the powers of the Federal Government will violate the very terms of that loan?

Voted YES on additional $825 billion for economic recovery package.

Proponent's argument to vote Yes:Rep. DAVID OBEY (D, WI-7): This country is facing what most economists consider to be the most serious and the most dangerous economic situation in our lifetimes. This package today is an $825 billion package that does a variety of things to try to reinflate the economy:

1. creating or saving at least 4 million jobs
2. rebuilding our basic infrastructure
3. providing for job retraining for those workers who need to learn new skills
4. moving toward energy independence
5. improving our healthcare system so all Americans can have access to quality treatment
6. providing tax cuts to lessen the impact of this crisis on America's working families.

Opponent's argument to vote No:

Rep. JERRY LEWIS (R, CA-51): Most of us would agree that the recent $700 billion Troubled Asset Relief Program (TARP) is an illustration of how good intentions don't always deliver desired results. When Congress spends too much too quickly, it doesn't think through the details and oversight becomes more difficult. The lesson learned from TARP was this: we cannot manage what we do not measure. We cannot afford to make the same mistake again.

Sen. THAD COCHRAN (R, MS): We are giving the executive branch immense latitude in the disbursement of the spending this bill contains. We are doing so without any documentation of how this spending will stimulate the economy. Normally, this kind of information would be contained in an administration budget. For items that have a short-term stimulative effect, most of us will feel comfortable debating their merits as an emergency measure. But there is a great deal of spending that is not immediately stimulative.

Voted YES on $60B stimulus package for jobs, infrastructure, & energy.

Supplemental appropriations for:
1. Infrastructure Investments: Transportation: DOT, FAA, AMTRAK, and FTA
2. Clean Water (EPA)
3. Flood Control and Water Resources (ACE)
4. 21st Century Green High-Performing Public School Facilities (ED)
5. Energy Development (DOE)
6. Extension of Unemployment Compensation and Job Training
7. Temporary Increase in Medicaid Matching Rate
8. Temporary Increase in Food Assistance

Proponent's argument to vote Yes:Rep. DAVID OBEY (D, WI-7): Congress has tried to do a number of things that would alleviate the squeeze on the middle class. Meanwhile, this economy is sagging. Jobs, income, sales, and industrial production have all gone down. We have lost 600,000 jobs. We are trying to provide a major increase in investments to modernize our infrastructure and to provide well-paying construction jobs at the same time.

Opponent's argument to vote No:Rep. JERRY LEWIS (R, CA-41): Just 2 days ago we were debating an $800 billion continuing resolution. Now in addition to being asked to pay for a bailout for Wall Street, taxpayers are being asked to swallow an additional $60 billion on a laundry list of items I saw for the first time just a few hours ago. The Democratic majority is describing this legislation as a "stimulus package" to help our national economy. But let's not fool ourselves. This is a political document pure and simple. If these priorities are so important, why hasn't this bill gone through the normal legislative process? We should have debated each of the items included in this package.

It doesn't take an economist to tell you that the economy needs our help. But what does this Congress do? It proposes to spend billions more without any offsets in spending. The failure to adhere to PAYGO means that this new spending will be financed through additional borrowing, which will prove a further drag on our struggling economy.

Voted NO on paying down federal debt by rating programs' effectiveness.

Proponents recommend voting YES because:

My amendment says we are going to take about $18 billion as a strong signal from the Congress that we want to support effective programs and we want the taxpayer dollars spent in a responsible way. My amendment doesn't take all of the $88 billion for the programs found by PART, realizing there may be points in time when another program is not meeting its goals and needs more money. So that flexibility is allowed in this particular amendment. It doesn't target any specific program. Almost worse than being rated ineffective, we have programs out there that have made absolutely no effort at all to measure their results. I believe these are the worst offenders. In the following years, I hope Congress will look at those programs to create accountability.

Opponents recommend voting NO because:

The effect of this amendment will simply be to cut domestic discretionary spending $18 billion. Understand the programs that have been identified in the PART program are results not proven. Here are programs affected: Border Patrol, Coast Guard search and rescue, high-intensity drug trafficking areas, LIHEAP, rural education, child abuse prevention, and treatment. If there is a problem in those programs, they ought to be fixed. We ought not to be cutting Border Patrol, Coast Guard search and rescue, high-intensity drug trafficking areas, LIHEAP, rural education, and the rest. I urge a "no" vote.

Voted NO on $40B in reduced federal overall spending.

Voted NO on prioritizing national debt reduction below tax cuts.

Voted YES on 1998 GOP budget.

Voted NO on Balanced-budget constitutional amendment.

Require full disclosure about subprime mortgages.

Sen. DODD: Today we are facing a crisis in the mortgage markets on a scale that has not been seen since the Great Depression: over 2 million homeowners face foreclosure at a loss of over $160 billion in hard-earned home equity; over one out of every 5 subprime loans is currently delinquent. These high default rates have frozen the subprime and jumbo mortgage markets and infected the capital markets to the point where central banks around the world have had to inject liquidity into the system to avoid the crisis from spreading to other segments of the market.

One of the fundamental causes of this serious crisis is abusive and predatory subprime mortgage lending. The Homeownership Preservation and Protection Act of 2007 is designed to protect American homeowners from these practices, and prevent this disaster from happening again. The legislation will:

• realign the interests of the mortgage industry with borrowers to insure the availability of mortgage capital on fair terms both for the creation and sustainability of homeownership;
• establish new lending standards to ensure that loans are affordable and fair, and
• provide for adequate remedies to make sure the standards are met; and create a transparent set of rules for the mortgage industry so that capital can safely return to the market without bad lending practices driving out the good.

In the coming months, the housing crisis is going to get worse. We will need to continue to press lenders and servicers to provide real relief for homeowners threatened with foreclosure.

More enforcement of mortgage fraud and TARP fraud.

An Act to improve enforcement of mortgage fraud, securities and commodities fraud, financial institution fraud, and other frauds related to Federal assistance and relief programs, and for the recovery of funds lost to these fraud.
• Amends the federal criminal code to include within the definition of "financial institution" a mortgage lending business or any entity that makes a federally related mortgage loan.
• Extends the prohibition against making false statements in a mortgage application to employees and agents of a mortgage lending business.
• Applies the prohibition against defrauding the federal government to fraudulent activities involving the Troubled Assets Relief Program (TARP) or a federal economic stimulus, recovery, or rescue plan.
• Expands securities fraud provisions to cover fraud involving options and futures in commodities.
• Authorizes appropriations to the Attorney General, the Postal Service, and HUD, for investigations, prosecutions, and civil proceedings involving federal assistance programs and financial institutions.
• Amends the Omnibus Crime Control and Safe Streets Act of 1968 to define "covered criminal activity" as including a criminal conspiracy including economic crime, financial fraud, and mortgage fraud.

Sponsored bill banning abusive credit & enhancing disclosure.

Credit Card Accountability Responsibility and Disclosure Act of 2009 or the Credit CARD Act of 2009:
• Tile I: Amends the Truth in Lending Act to require advance notice of any increase in the annual percentage rate of interest (APR) pertaining to a credit card account under an open end consumer credit plan.
• Imposes a freeze on interest rate terms and fees on canceled cards.
• Sets limits on fees and interest charges, including a prohibition against penalties for on-time payments.
• Allows imposition of an over-the-limit fee only once during a billing cycle. Prohibits its imposition in a subsequent billing cycle.
• Requires fees for cardholder agreement violations and currency exchanges to be reasonable.
• Prohibits a creditor from furnishing information to a consumer reporting agency concerning a newly opened credit card account until the credit card has been used or activated by the consumer.
• Title II: Enhanced Consumer Disclosures: Requires the creditor to provide a toll-free telephone number at which the consumer may receive information about accessing credit counseling and debt management services.
• Revises requirements relating to late payment deadlines and penalties.
• Requires a periodic statement of account to disclose: (1) the date by which a payment must be postmarked, if paid by mail, in order to avoid the imposition of a late payment fee; and (2) any possible resulting increase in interest rates for late payments.
• Title III: Protection of Young Consumers: Prohibits issuance of a credit card on behalf of a consumer under age 21, unless the consumer has submitted a written application meeting specified requirements.