I appreciate very much listening to my Republican colleagues. I, too, came in in the freshman class, along with my Republican colleagues, and I came to the floor tonight, Mr. Speaker, to talk about the economy and to talk about regulatory reform and what we're doing to address the foreclosure crisis here in the United States. But I can't allow some of the comments that I just heard go without challenge.
I heard it said that we've only been given 72 hours to read the bill. Now I think, Mr. Speaker, you probably remember back at the end of July, there was a push to try to vote on the health care plan. I, along with you, I believe, and many others suggested that the American people have time, that they have time to read the health care bill, that we have time to digest this. We went home. We held town meetings. I don't know about the other Members of Congress. I know I had more than 100 meetings on health care during that time period. So we have had far more than 72 hours.
But then they said, We need 72 hours for this particular bill. So the bill, itself, which is simply a modification of bills that we have been discussing, that we've been hearing in committee, bills that we have been meeting on for months was introduced on Friday. I put it on my Web site. Many people put it on their Web site. There has been plenty of time. If you want to oppose health care, then obviously that is up to you to oppose health care. But let's not hide behind this thing about 72 hours. We have had months to discuss this. We will have far more than 72 hours to look and review the bill at hand.
I also want to talk about small businesses, because I know, Mr. Speaker, you and I have worked very closely on this in protecting small businesses in the health care reform bill. As you recall, the bill as originally introduced had a threshold of $250,000 for payroll. That is, any small business that had more than $250,000 in payroll would be subject to a surcharge, a surcharge where they pay their fair share. That has been increased in this bill to $500,000, a significant increase for small businesses. I don't know what businesses my colleagues from the Republican side are visiting, but I can tell you when I go out to small businesses, be they Democrat or Republican, they're talking about their premium increases. They're talking about their premium increases of 20 percent, of 30 percent. The fact of the matter is, Mr. Speaker, this is all about small businesses. This is about protecting small businesses. Because right now in the State of Ohio, the State I hail from, less than 50 percent of small businesses are able to provide health care to their employees; less than 50 percent. It's because of those rising costs. So while they say it does nothing for individuals, well, they're absolutely wrong. If you're an individual working for a small business and the employer cannot afford health care, this bill helps you; it helps you, and it helps your family. If you're an individual with a preexisting condition, you happen to be ill and you need to get health insurance, you can't do it right now. Does this bill help those individuals? Absolutely. If you're an individual that has health insurance and you happen to get sick, and you need to draw upon that health insurance, right now you can be cut off. This bill says, No. You can't do that any longer. The insurance company can't stop covering you for your illness. So this bill is all about helping small businesses and helping individuals.
I would encourage my colleagues to read the bill. Yes, it's long. But we're beyond chapter books at this point. We are able to read long bills. It's long because this is a comprehensive piece of legislation, and I think it deserves debate. It deserves far more than rhetoric. But rhetoric is what you tend to hear when you come down to the House floor. Rhetoric is what you tend to hear when Republicans line up and give 1-minute speech after 1-minute speech after 1-minute speech, be it about energy or health care or the economy. The other side of the aisle is big on rhetoric, but they're not big on solutions, nor are they big on taking responsibility. They act as if they weren't here. They act as if they weren't in charge since 1994, that they weren't elected in the Newt Gingrich majority, that they didn't have power until 2006. But the fact of the matter is that they were the party in party. They were the party in control. They were the party as this housing crisis spiraled out of control. They were the party as the rising costs of health care kept mounting and mounting and mounting and harming our small businesses and harming our economy.
THE U.S. ECONOMY For the 8 years prior to being elected to Congress, Mr. Speaker, I was a State representative in Ohio. I come from a working-class neighborhood in Cincinnati, and I saw house after house being foreclosed on. Now I didn't know what was happening in 2001. I didn't know what was happening in 2002. So we put together a housing task force, and we started asking questions. We started looking into some of these loans that were being floated to my neighbors, to folks in my neighborhood to figure out why these houses were going into foreclosure. And it was interesting. We found that people who never should have qualified for loans were suddenly qualified. People that couldn't even document that they had the income to purchase a home were qualifying for home loans. Then, of course, they couldn't afford to pay the mortgages, and those were the houses being foreclosed on. We call these subprime loans. When people who can't afford to pay their bills, people who have poor credit scores are able to get a loan, those are subprime loans, as opposed to people who do pay their bills and they do have high credit scores. Those are prime loans.
So we looked at this, and we looked at some of the practices of the financial institutions, and we just scratched our heads and said, Well, how is it that a financial institution can float a loan to somebody that can't prove their income, can float a loan to somebody that has a poor credit history, yet they're purchasing an $80,000 home, they're purchasing a $120,000 home? How is this happening?
Well, the answer is, Mr. Speaker, it was all about what was going on on Wall Street. It was all about what was going on on Wall Street because what was going on on Wall Street was that people were making a lot of money, and they were making a lot of money off of these products that are called derivatives or mortgage-backed securities or credit default swaps.
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The world had changed in the area of mortgage finance in the early 2000s. The world had changed dramatically. What had happened was this. Where in the past if you wanted to buy a home, you wanted to achieve the American Dream, you would go down to your bank, you would go down to the savings and loan, and you would talk to [Page: H12267] the loan officer. They would work with you to negotiate a mortgage. They would work with you to negotiate that loan, and then they would hold on to the mortgage paper. And this is important. They held the mortgage paper as part of their portfolio. It was their investment portfolio. It was a long-term investment on the part of the financial institution.
But what we found out was that the world had changed. No longer were these financial institutions holding on to that paper. In many cases, no longer were they the local bank or the local savings and loan. They were out-of-town entities who had never seen your house, and who had never looked at the appraisal. The reason they were closing those loans was because of those mortgage-backed securities on Wall Street. You see, they were able to close those loans and they would immediately sell them. They would sell them on the secondary market, and then they would bundle the loans into thousands of mortgage loans that were sold on Wall Street as a security, a mortgage-backed security.
So what happened? Well, the folks that were closing the loans, because they were no longer holding the paper, because they no longer had any skin in the game, they were qualifying everybody that walked in the door. They were qualifying everybody that walked in the door at the highest prices they could possibly get. So, rather than saying, you know, we are going to put you in a 30-year fixed because it is a more stable product or a 15-year fixed because it is a more stable product, we are going to get you in this 3-year, adjustable-rate mortgage. And, oh, by the way, this rate, yes, it is a good rate right now, but it is going to adjust in 3 years. Oh, and there is this little prepayment penalty that is also in the loan. So, yes, I know it is a stretch for you right now, you who are a subprime borrower, you who don't have a steady job, and you who may be making a stretch to make this loan payment every month, yes, I know it is a stretch, but you can qualify. You can achieve the American Dream.
The reality was this, in those 2 or 3 years when that interest rate started adjusting, and in some cases it was adjusting every 3 or 4 months, when it started adjusting, that stretch was no longer a reality for many of those families. They tried to get out. They wanted to renegotiate, but they couldn't renegotiate because they had this prepayment penalty of a thousand dollars or $2,000. So if they couldn't afford their $600 a month loan, they are not going to be able afford the $1,000 or the $2,000 in the prepayment penalty. So they give up. They throw up their arms and walk away. That is a foreclosure. That was happening time after time after time in my neighbor and neighborhoods across Ohio and across the country.
So what do we do? Well, we in the State legislature said wait a minute, we have to do something about this. We have to stop this predatory behavior. And we tried. We tried in the State of Ohio. But in the State of Ohio, like so many other States, we had very little authority because the financial institutions were regulated by the Federal Government.
So we turned to the Federal Government to help us out. This is where we get back to who was in charge. In 2001, Stephanie Tubbs Jones, a tremendous Congresswoman from Ohio, introduced predatory lending legislation. And we had predatory lending legislation introduced in every session of Congress after that. So in 2001, we could have done something. In 2002, we could have done something. In 2003, we could have made a difference. In 2004, we could have enacted predatory lending legislation. In 2005, we could have protected those homeowners. In 2006, we could have done something about it.
There were millions of homes going into foreclosure, but this body stood silent. This body, controlled by the Republican Party, stood silent, and they didn't address the foreclosures. They didn't address the runaway greed on Wall Street in the form of mortgage-backed securities and derivatives that were leveraged up to 30 and 40 times. They didn't address any of it. They said the markets will work it out. We don't need government intervention.
But when housing prices went south and the investors in those mortgage-backed securities soon learned, you know, those mortgages aren't worth much, all of a sudden the bottom fell out of the market. And that inaction, it is that inaction that caused this recession.
This was a recession precipitated by the financial markets. It was precipitated by what was going on in mortgage finance, and it caused the near collapse of our economy. It caused the near collapse of financial institutions across the globe.
So at the end of last year, in September of last year, the Congress was asked, President Bush pleaded with the Congress to pass a bailout for the banks, a bailout that many Americans never wanted to see. But the reality was that things had gotten so bad that but for the intervention of the Federal Government, we could have had the collapse of the financial markets globally all due to the inaction of the Federal Government.
That's where we were. And so now we hear Republicans come down to the floor of the House and act as if the world just began in January of 2009, acting as if all of these problems started just this January. I liken it to this, Mr. Speaker. When I go out and talk about the mortgage crisis and the calamity that has occurred, I say it is like somebody causing a 20-car pileup on the highway and then we show up with the tow truck to try to clean things up, and they start yelling at us for blocking traffic.
You see, we have been elected to clean up the mess, we being elected to clean up the mess caused by the inaction. That is what we are doing. That is why in the Financial Services Committee we are working on regulatory reform. That is why this Congress has passed predatory lending legislation. That is why this administration has worked to save thousands of homes across this country.
I am joined tonight, Mr. Speaker, by my friend, also a new legislator, from the State of Connecticut, Jim Himes, who has been a tremendous member of the Financial Services Committee, bringing both experience on Wall Street as well as in the neighborhoods.
Jim, why don't you talk a little bit about from your perspective and what you have seen.
