Chris Carney on Budget & Economy

Voted YES on regulating the subprime mortgage industry.

• recommending default on an existing loan in connection with closing of a high-cost mortgage
• steering incentives to mortgage originators
• exercising sole discretion to accelerate indebtedness
• single premium credit insurance and
• negative amortization mortgages.

Proponents support voting YES because:

Rep. FRANK: This legislation seeks to prevent a repetition of events that caused one of the most serious financial crises in recent times. We have a worldwide problem economically, with a terrible shortage of credit. Innovations in the mortgage industry, in themselves good and useful, but conducted in such a completely unregulated manner as to have led to this crisis. The fundamental principle of the bill is not to put remedies into place, but to stop future problems from occurring in the first place. We have had two groups of mortgage originators: banks subject to the regulation of the bank regulators; and then mortgage loans made by brokers who were subject to no regulation. The secondary market has been on the whole useful but, having been unregulated, has caused some problems.

Opponents recommend voting NO because:

Rep. HENSARLING: This is a bad bill for homeowners in America. There is no doubt that this Nation faces a great challenge in the subprime market, but this piece of legislation is going to make the situation worse. Clearly, there has to be enforcement against fraud in the subprime market. But what Congress should not do is essentially outlaw the American Dream for many struggling families who may be of low income, who may have checkered credit pasts, for whom a subprime mortgage is the only means to purchase a home.

Retire half the public debt by 2006.

Blue Dog budget framework
• Set tax and spending priorities within a five year budget framework instead of using ten-year budget projections to allow for backloaded tax cuts or spending increases
• Require all tax or spending initiatives to be fully implemented within the five year budget window
• Retire over half of the publicly held debt by 2006
• Devote one-quarter of the [non-Social Security] surplus to tax cuts retroactive to 2001, for a net tax cut of $180 billion from 2001-2006
• Establish realistic discretionary spending caps which will restrain spending but also provide room to fund new initiatives without relying on unspecified or unrealistic spending.