The Democratic Caucus has produced this chart comparing the first year of the Democratic Congress to the first year of the Republican Congress:
Democratic Caucus Chair Rahm Emanuel also issued the following statement after President Bush’s press conference this morning:
“In 2007, Congress brought change to Washington, but President Bush’s veto pen prevented the kind of significant change our country needs. Rather than usher in support for new sources of energy, the President’s veto pen prolonged our addiction to oil. Rather than give 10 million children the health care they deserve, the President’s veto pen left millions of kids uninsured. And rather than hold Iraqis accountable for Iraq, Bush’s veto pen ensured the American military and taxpayers continue to bear the cost of the war. 2008 can be a year of big change if President Bush joins us in preparing for the future, rather than defending the failed policies of the past.”
Today the House will debate the Mortgage Reform and Anti-Predatory Lending Act of 2007, H.R. 3915, sponsored by Rep. Brad Miller (NC-13). This comprehensive anti-predatory lending legislation will help stop bad loans from being made in the first place — making sure that consumers get mortgages they can repay, strengthening consumer protections against reckless and abusive lending practices, and giving consumers the ability to see redress.
The House is set to take up new regulations for mortgage issuers as soon as Thursday while lawmakers are putting together a separate measure that would allow bankruptcy judges to ease the financial squeeze on some who face losing their homes.
The article later describes some details of the bill:
The first measure scheduled to be considered by the House is focused more on curbing future lender abuses than providing relief for those now at risk of losing their homes. It would set new standards for ensuring that borrowers have a reasonable ability to repay the loan, establish new licensing requirements for mortgage brokers, put new restrictions on incentives for steering borrowers into riskier loans and provide some liability for financial institutions that trade in faulty mortgages.
Representative Barney Frank, the Massachusetts Democrat who is chairman of the Financial Services Committee, said the bill could be the first major consumer protection measure to emerge from the current Congress, with economic anxiety trumping opposition from powerful industry lobbying groups. “I think the consumers can beat the industry,” Mr. Frank said.
Though the bill has some Republican support, Republican leaders have joined mortgage industry groups in raising serious reservations about the plan.
Representative Adam H. Putnam of Florida, chairman of the House Republican Conference, equated the bill with using “a sledgehammer on a gnat,” saying it was an exaggerated response to a problem afflicting a relatively small percentage of people.
Chairman Barney Frank of the Financial Services Committee spoke on the rule:
Chairman Frank: “I do want to say we are here dealing with an issue, subprime mortgages, that is the single biggest contributor to the greatest financial crisis the world has seen since the Asian crisis of the late 90’s. We are in a very difficult situation now in the financial markets, and wholly unregulated subprime mortgages, unregulated by the originator, and then unregulated in the secondary market, has given rise to this.”
Rep. Keith Ellison (MN-05) spoke during full debate:
Rep. Ellison: “No doubt, the American dream has always been homeownership, and yet with exploding ARMs, with prepayment penalties, and other such exotic products, that dream of homeownership has become an American nightmare. Mr. Speaker, I’d love to be able to take every Member of this body on a tour through north Minneapolis. There are blocks in my community where every other house is boarded and vacant. The fact is, is that for the people who have made every single mortgage payment and never late, they suffer because of this crisis because their home values have been seen dropping and plummeting. We’ve seen our cities suffer.”
Rep. Brad Miller (NC-13), the primary sponsor, spoke during full debate:
Rep. Miller: “The late Ned Gramlich, a well regarded former Federal Reserve Board Governor asked why was it that the riskiest loans were being sold to the least sophisticated consumers? It was a rhetorical question, Mr. Speaker. He knew the answer. He knew those loans were being sold to people to take advantage of them, to separate from middle class homeowners more and more in equity in their home to trap them in a cycle of having to borrow and borrow again, every time they borrowed losing more of the equity in their homes”
Extended transcript:
Rep. Miller: “Now, several speakers have said that they think the consumers should make choices, there should be a variety of choices available to consumers. Sometimes they say that this bill will shut down market innovation. Americans are for innovation, Mr. Speaker, just as they are for reform. Americans are fundamentally reformers. So politicians have figured out to call everything they do a reform. However obviously contrary to the public interest it is. And now American business has learned to call everything they do an innovation, regardless of how bad it hurts consumers. I can think of many wonderful innovations. When we think of an innovation we think of a scientist in a lab coat coming up with new products. Mr. Speaker, I’m now the age my father was when he died of a heart attack in 1965. There wasn’t a thing we could do to help people with heart disease in 1965. But I am on a cholesterol medicine, because I inherited from my father high cholesterol, that I hope will allow me to outlive my father. I think that drug is an important innovation, I’m glad we have made that innovation. Mr. Speaker, this necktie is an innovation. 10 years ago you could not buy a silk necktie that was stain resistant. And for those folks like me who tended to miss their mouth from time to time, the cost in new neckties in any given year was hundreds of dollars. But this tie has a nanotechnology process that causes liquids to bead up and roll off rather than soak in and stain. Mr. Speaker, this necktie is an important innovation to me. But what on Earth do we mean when we say that a mortgage is innovative? It means, simply, Mr. Speaker, that there is no end to the variety of terms, there is a proliferation of indecipherable terms that are not designed to help consumers.
“Alan Greenspan called them ‘exotic loans.’ Others have called them ‘toxic loans.’ The innovation is not really about allowing consumers to tailor narrowly the loan they get to their specific cicumstances. The late Ned Gramlich, a well regarded former Federal Reserve Board Governor asked why was it that the riskiest loans were being sold to the least sophisticated consumers? It was a rhetorical question, Mr. Speaker. He knew the answer. He knew those loans were being sold to people to take advantage of them, to separate from middle class homeowners more and more in equity in their home to trap them in a cycle of having to borrow and borrow again, every time they borrowed losing more of the equity in their homes.”
Financial Services Chairman Barney Frank mocks the Republican Motion to Recommit :
Chairman Frank: “But listen to this: lines 14 and 15, you must show a passport issued by the United States or a foreign government. Now what makes anyone think that people who are in the United States with a foreign passport are here legally? They have foreign passports from other countries. I think the problem is some on the other side have taken the word alien too literally. That is, they think that an alien is someone who is not from the earth, because someone who is in America illegally who is from the earth might have an Iranian passport or Venezuelan passport or a Burmese passport… I think the real estate industry, this is literally my speculation, real estate industry said to the Republicans, ‘Wait a minute, we make a lot of money selling to foreigners, don’t cut out the foreigners’ - but you forgot to say legal foreigners! …An American in a Real ID state who doesn’t have a passport can’t make it. But an Iranian with an Iranian passport, welcome to my home! here’s your mortgage! Now I understand the impulse to prevent illegal aliens from getting predatory mortgages, that’s a very kind thing that the Republicans want to do for them - but they don’t do it competently…”
The Financial Services Committee is currently holding a hearing, “Progress in Administration and Other Efforts to Coordinate and Enhance Mortgage Foreclosure Prevention.” The hearing will examine recent progress in coordinating lenders, mortgage servicers, and nonprofit organizations to prevent mortgage foreclosures, encourage modifications of troubled loans, and assist at-risk homeowners. One focus of the hearing will be the “HOPE NOW” initiative; an alliance consisting of lenders, servicers, and community-based counselors whose formation was announced by the Departments of Treasury and Housing and Urban Development on October 10, 2007.
Chairman Frank:
“And there is one last point I would make, and that’s the justification for all this energy on the part of high officials of this administration, from HUD and Treasury, members of Congress, and one of the arguments is ‘well, why should we help these people who made bad decisions?’ Leave aside compassion, the fact that some people were misled, leave aside all those reasons, there is a very good economic reason. I think in economic terms, the externalities of this crisis are severe…”
Full transcript:
This hearing is called as part of a cooperative effort between the Congressional and executive branches, on dealing with the subprime crisis. We have made it clear that the subprime crisis has required us to take a two-fold approach. On Tuesday this committee will be marking up legislation that will, we hope, if enacted, diminish the likelihood of a crisis such as this recurring. But we are constrained when dealing with existing mortgages and existing contracts from legislating in most cases. We do not want to abrogate existing contracts by law. We are prepared to encourage negotiations. It is a two-track process. I very much appreciate the cooperation we’ve had for the administration, particularly the bank regulators, but particularly Commissioner Montgomery going forward because this committee already responded, in substantial part, to the administration request in the FHA so we’ve got a collaborative effort going on. Some differences, but essentially a collaborative effort on the FHA. And the bank regulators, the FDIC, the OCC, the OTS, the credit union administration, and the fed had been cooperative in working with us and drafting legislation. Again, we won’t have 100% agreement but we are within a generally agreed upon a framework. That is one part of it, the other part is the ongoing effort we’ve had to try to persuade people to do modifications of existing contracts, although there has also been some legislative cooperation. The president has supported and the house has already passed legislation to make sure there is no tax liability for mortgagors who given some kind of flexibility.
And one other one that I would mention that I think has been a good example, and a necessary example of cooperation here, members of this committee wrote to the Securities and Exchange Commission earlier this year and asked them to intervene with the Financial Accounting Standards Board. To encourage them to make it clear to the servicers, that if the services of mortgages in the secondary market could demonstrate that it was in the interest in the holders of the paper to do a workout, namely that it would be better for them from the economic standpoint not to foreclose, but to do some reworking so that there would be a steady income stream, they could do that. We got the permission of the Financial Accounting Standards Board which is responsive. The reason I sight of these things is this: a lot of pieces and put in place. And the bank regulators have also made it clear to their credit that forbearance will be allowed. We have done a great deal to encourage the holders of the mortgages to show flexibility. We provide some tax help. We have a number of a very useful organizations – neighborhood organizations, citizens groups – who are trying to work with the borrowers. What seemed to some of us some time ago, you know, a few weeks ago, is that while the pieces were out there, they were not mashing. While we had put a number of individual policies in place but that we needed to overcome the inertia of everybody and their separate sphere. A lot of efforts like that have been going on, on is this HOPE NOW that the administration has proposed and we thought it would be very useful to get a report on that and we have. And we have two panels. First, representatives of the administration, secondly neighborhood and citizens groups and also some of the businesses. One of the things we do want to make clear, we are not talking about legislation that compels anybody to do anything. We are not talking about any kind of a bailout in the sense of public money. No public money is gone to go either to mortgagors or mortgagees. No public money is going to go to payoff people, in terms of the loan. Public money is [being used] to make sure the advocates are available, that we can reach out.
Secondly I want to deal with those who claim that there is some moral hazard involved here. Namely that we are going to be so effective in alleviating problems that a number of people will say “boy, that was fun, lets do it again.” As anybody involved in this knows, that is not remotely true. We are mitigating pain, we hope, we are diminishing terrible consequences. Nothing we are doing, if we are 100% successful, is going to make anybody on either side of the transaction want to go through it again. We are talking about losses of lenders that they deserve to have because they made, in some cases, bad decisions. We are talking about pain on the borrowers that we cannot avoid, we can diminish. So I really want to make clear we’re not talking about moral hazard.
And there is one last point I would make, and that’s the justification for all this energy on the part of high officials of this administration, from HUD and Treasury, members of Congress, and one of the arguments is “well, why should we help these people who made bad decisions?” Leave aside compassion, the fact that some people were misled, leave aside all those reasons, there is a very good economic reason. I think in economic terms, the externalities of this crisis are severe. That is the negative economic effects on people, who by nobody’s definition did anything remotely unwise or incorrect are severe. In particular, we have a large number of people in this country who are making, what? $30,000 to $50,000 or $60,000 a year. They took out mortgages, their working hard to pay their mortgages, and they are among the victims of a widespread foreclosure pattern. Because if you own a home, and you’re paying your mortgage and the house across the street is foreclosed upon and three houses down and others, you have a deterioration of the neighborhood. You get vacant housing, which becomes a source of difficulty; you get a deterioration of property values. So there is a public policy reason to both deal with this crisis now and make it less likely in the future.
According to the Oversight Committee, new documents suggest that Blackwater has engaged in significant tax evasion, failing to withhold and pay millions of dollars in Social Security, Medicare, unemployment, and related taxes, and sought to conceal its conduct from Congress and law enforcement officials.
Mr. Erik Prince
Chairman
The Prince Group
1650 Tysons Boulevard, Suite 800
McLean, VA 22102
Dear Mr. Prince:
I have received documents which suggest that Blackwater may have engaged in significant tax evasion. According to an IRS ruling in March 2007, Blackwater violated federal tax laws by treating an armed guard as an “independent contractor.” The implication of this ruling is that Blackwater may have avoided paying millions of dollars in Social Security, Medicare, unemployment, and related taxes for which it is legally responsible.
Unlike DynCorp and Triple Canopy, the two other major private military contractors providing security services to the State Department in Iraq, Blackwater classifies its armed guards as independent contractors rather than as employees. Under federal tax laws, this classification has important ramifications. Businesses must pay Social Security, Medicare, and unemployment taxes for their employees. They must also withhold federal income taxes on their salaries. By classifying its armed guards and other personnel as independent contractors instead of employees, Blackwater has apparently evaded withholding and paying these taxes.
When you testified before our Committee on October 2, 2007, Congresswoman Norton asked you why Blackwater treats its security personnel as independent contractors, while your competitors treat their guards as employees. You responded that Blackwater treats its guards as contractors because you found “it is a model that works” and because your guards prefer the “flexibility” of an independent contractor relationship.
Since the hearing, I have learned that the IRS determined in March — six months prior to your testimony — that your classification of a security guard working in Afghanistan as an independent contractor was “without merit.” The IRS advised that “[y]ou are responsible for satisfying the employment tax reporting, filing, and payment obligations that result from this determination.” By its terms, the IRS ruling applied only to the individual security guard who protested his classification, but the IRS warned that its ruling “may be applicable to any other individuals engaged by the firm.” The logic of the ruling would appear to apply to your entire workforce in Iraq and Afghanistan.
There is also evidence that Blackwater has tried to conceal the IRS ruling and the evasion of taxes from Congress and law enforcement officials. The IRS determination was issued in response to an inquiry by an individual security guard who questioned his classification as an independent contractor. In June, Blackwater required this employee to sign a nondisclosure agreement before it agreed to pay the back pay and other compensation that he was owed. The terms of this agreement explicitly prohibited the guard from disclosing any information about Blackwater to “any politician” or “public official.” The agreement further provided: “THE UTMOST PROTECTION AND NONDISCLOSURE OF CONFIDENTIAL INFORMATION IS OF CRITICAL IMPORTANCE AND IS THE ESSENCE OF THIS AGREEMENT.”
It is difficult to read the IRS ruling and the nondisclosure agreement and not question Blackwater’s intent and actions. When the IRS issued an alert in2004 warning employers not to “incorrectly treat employees as independent contractors,” the IRS Commissioner described the “[f]ailure to pay employment taxes” as “stealing from the employees of the business” and said that “those who embrace these schemes face civil or criminal sanctions.” Yet it now appears that Blackwater used this illegal scheme to avoid millions of dollars in taxes and then prevented the security guard who discovered the tax evasion from contacting members of Congress or law enforcement officials. I hope you will cooperate with the Committee in its investigation into this serious matter.
By a vote of 232-173, the House has just passed the Tax Collection Responsibility Act of 2007, H.R. 3056, to repeal the use of private debt collection companies to collect federal income taxes. The bill would end taxpayer harassment, abusive calling, and violations of taxpayer rights, often incentivized by a reward for greater returns from the private firms. Furthermore, according to the IRS, the return on investment for IRS employees doing work similar to private collection agencies is 13-to-1, while the private collection agencies’ return is about 4-to-1.
Chairman Charlie Rangel of the Ways and Means Committee, the sponsor of the bill, spoke on the floor:
Chairman Rangel: “We’ve had many hearings, and the Internal Revenue Service on more than one occasion had indicated that given the resources they could do a more effective job than having this subcontracting out to private firms. There’s nothing magic about privatization, just saying that it’s privatized doesn’t mean that it’s more effective or that you’re doing the right thing.”
The bill would repeal the 2004 provisions that give the IRS authority to enter into contracts with private companies to collect federal income taxes. Numerous cases have been identified that illustrate taxpayer harassment, abusive calling, and violations of taxpayer rights, the Fair Debt Collection Act, and taxpayer return disclosure protections. For example, one elderly couple was called 150 times, including five times a day, asking for a taxpayer. Within the first five calls, the debt collector knew that the taxpayer did not reside at the home. Calls continued for 27 more days with 1-7 calls per day. Other cases involve people in nursing homes, those serving in Iraq, innocent spouses and those subject to identity theft. The bill would also delay the application of an onerous three percent withholding requirement on government payments, and discourage individuals who renounce their U.S. citizenship to avoid paying taxes.
Wednesday, October 3rd, 2007 by Office of the Speaker
Washington, D.C. — Speaker Nancy Pelosi was joined by Senate Majority Leader Harry Reid and other House and Senate Democratic leaders at a news conference this morning in the Capitol to offer a plan to stem the rising tide of home foreclosures created by the subprime mortgage market crisis. Below are Pelosi’s opening remarks:
“Thank you, Leader Reid. Today, our country faces a challenge that threatens the economic security of our economy and the dream of home ownership for many of America’s working families – the subprime lending crisis.
“The number of foreclosures reported in August was more than double than the same time one year ago. This past August alone, 240,000 American families faced the heartbreak of losing their home.
“At the same time, our broader housing market is in its worst slump in 16 years. This means fewer jobs and the decline in the value of a family’s biggest asset, their home. Foreclosures are not in the best interest of lenders, certainly not in the best interest of the home owner, and not in the interest of their community.
“What does more to stabilize a community than home ownership? Putting down roots and investing in the community around them does just that. The strength of America in terms of the strength of our communities and our families is ill-served by ignoring the subprime crisis – we are not doing that.
“There’s an opportunity for the lending institutions to do much more to help. More than 40 percent of consumers with subprime mortgages are eligible for lower fixed rates. Yet, according to a recent survey of 16 subprime lenders, only 1 percent of consumers experiencing higher interest rates had their mortgages renegotiated.
“The subprime crisis demands action, and we are working to protect families who have lost their homes or are in danger of foreclosure, and to institute reforms to prevent other subprime problems.
“I am very proud of the leadership of Barney Frank, Chair of our Financial Services Committee, Chairwoman Maxine Waters of the Housing and Community Opportunity Subcommittee, and the Vice Chair of the Joint Economic Committee, Congresswoman Carolyn Maloney.
“With that, I’m pleased to yield to the distinguished Chairman of the Senate Banking Committee, a person who has been a champion for America’s working families for his entire career, Chairman Chris Dodd.”
Speaker Nancy Pelosi, Senate Majority Leader Harry Reid, Congressman Barney Frank, Congresswoman Carolyn, and Senators Chris Dodd, and Charles Schumer also released a letter to President Bush today, urging him to take the steps needed to counter the subprime mortgage crisis. See the text of the letter as well as a fact sheet on the issue: (more…)
Chairman Frank:
“My difference with Mr. Greenspan is that he implicitly assumed there that the choice was between deflating the economy, raising interest rates and slowing activity down, and doing nothing. And this notion that there are only macroeconomic responses to potwential abuses, I think is problematic. In fact there are micro-responses, specifically thoughtful regulation… and I do want to just say now, and I’ve spoken to the ranking Member, if the Senate were to send us a cherry-picked bill dealing only with the caps or only with the jumbo mortgages, we would not want to go along with that. I do want to deal with both of those, but only in the context of the overall legislation and I hope the Senate will be working with us on that.”
Ben Bernanke, Chairman of the Board of Governors of the Federal Reserve System, gives opening testimony:
Bernanke:
“Beyond the actions underway at the regulatory agencies, I’m aware that the Congress is considering statutory changes to alleviate foreclosures, possibly including modernizing the programs administered by the Federal Housing Administration as Secretary Jackson has just described. Prospectively, the Federal Reserve is actively working to prevent these problems from recurring while still preserving responsible subprime lending.”
Rep. Maloney: “Yesterday Realty Track released the latest bad news, that foreclosures reported in August increased 36% since July and 115% since this time last year. Expectations are that the next eighteen months will be even worse as many subprime loans reset to higher rates… In Congress we are focusing on helping families stay in their homes and preventing another crisis like this in the future. Just yesterday the House of Representatives passed legislation to enable the FHA to serve more subprime borrowers at affordable rates and terms, attract borrowers who have turned to predatory loans in recent years, and offer refinancing to homeowner’s struggling to meet their mortgage payments.”
Peter R. Orszag, Director of the Congressional Budget Office, gives testimony:
Orszag: “In the traditional form of mortgage financing the originator of the loan also holds the loan in its portfolio and therefore has a very strong incentive to learn about the borrower’s ability to repay. By contrast, in the securitized form of mortgage financing the originator sells the mortgage to a third party and earns a fee for origination with little immediate reward were discovering relevant information about the borrower. As a result the originator may not have adequate incentives to exercise care in discretion in its underwriting unless the ultimate purchaser or the entity providing the securitization carefully structures such incentives…”
Dr. Robert J. Shiller, Stanley B. Resor Professor of Economics at Yale University, gives testimony:
Schiller: “I wanted to reiterate the fundamental importance of the unwinding of the housing boom. Senator Schumer, you quoted some alarming statistics and I heard numbers in the hundreds of billions. But if we look at the prospective loss in value of homes in this country, it’s actually in the trillions… If you correct this for inflation we’re talking about a 13% to 20% decline in real value that’s already in the market for a year from now, and that with $23 trillion in real estate value, that’s trillions of dollars of losses. That’s the fundamental thing that will drive it, it will upset balance sheets, it will upset lots of our financial institutions.”
As mentioned by Rep. Maloney, yesterday the House passed the Expanding Homeownership Act of 2007 to revitalize the Federal Housing Administration (FHA), which was established to provide a reliable source of affordable mortgage loans for first-time homebuyers. The bill will enable the FHA to serve more subprime borrowers at affordable rates and terms, to attract borrowers that have turned to predatory loans in recent years, and to offer refinancing to homeowners struggling to meet their mortgage payments in the midst of the current turbulent mortgage markets.
Strengthens protections for higher risk FHA borrowers:
More than doubles federal funding for housing counseling, to help subprime homebuyers who fall behind on their mortgage payments, and requires counseling for higher risk FHA borrowers prior to purchasing their home.
Requires disclosures regarding the costs associated with lower down payment loans, so that borrowers can make a more informed decision about the type of loan they should take out.
Extends FHA-backed loans for homeowners struggling with mortgage payments:
Directs HUD to offer refinancing loans to help borrowers currently in default or at imminent risk of being in default – expanding on the Bush Administration proposal to serve 80,000 families.
Permits the FHA to offer zero and lower down payment loans in refinancing home loans.
Increases affordable housing, building on the progress Congress is already making:
Affordable Housing Fund. Authorizes up to $300 million a year for affordable housing from the bill’s excess profits, resulting from expanding FHA loans.
More affordable rental housing. The bill boosts FHA multifamily loan limits in high cost areas, to ensure that loans can cover the cost of construction, and bars the Bush Administration’s pending proposal to raise fees on FHA multifamily loans.
Enhances FHA’s reverse mortgage program for seniors to get cash out of their house:
Eliminates a volume cap on reverse mortgages and raises loan limits for seniors so that seniors that own their home can mortgage their home to pay for high health care bills and other expenses.
Reduces by 33% the maximum fee loan originators can charge senior citizens for reverse mortgage loans.
Today, the House is debating HR 2642, Military Construction and Veterans Affairs Appropriations for FY 2008. This bill will provide veterans with the health care and benefits we promised them, resulting in the hiring of more qualified doctors and nurses to improve medical services to our veterans and to reduce waiting times for doctor appointments, and provide more to help veterans suffering from traumatic brain injury (TBI), Post Traumatic Stress Disorder (PTSD), and mental health care issues.
Action on veterans’ health care funding could not come at a more important time - a military report released yesterday, shows there are significant problems in the military health care system and a significant rise in veterans suffering from mental disorders. More than one-third of the 230,000 new veterans who have applied for medical assistance from the Veterans’ Affairs Department suffer with mental disorders. This bill provides $600 million more than the President’s request for mental health, PTSD and Traumatic Brain Injury and makes five polytrauma centers and three Centers of Excellence for Mental Health and Post Traumatic Stress Disorder (PTSD) fully operational this year to care for those returning from Iraq and Afghanistan, including those with TBI.
Speaker Pelosi, Leader Hoyer, Chairman Chet Edwards, and Rep. Nancy Boyda on the legislation:
Historic Increases in VA Spending for FY 2008
Increases the VA budget by $6.7 billion above the FY07 level, the largest single increase in the 77 year history of the Veterans Administration and $3.8 billion above the President’s request.
For the first time, the budget for VA medical care exceeds the budget of the veterans’ service organizations by $294 million. This will ensure quality health care for 5.8 million patients, including about 263,000 Iraq and Afghanistan veterans, which the VA will treat in FY 2008.
Significantly reduces the 400,000 claims backlog for veterans waiting for disability and other benefits by adding more than 1,100 new claims processors.
Provides much needed maintenance of VA health care facilities (funding is $500 million above the President’s request) to prevent a Walter Reed-type scandal from occurring. A recent VA report outlined 1,000 specific problems at VA health facilities around the country, with a backlog of $5 billion in maintenance.
Provides $600 million more than the President’s request for mental health, PTSD and Traumatic Brain Injury and makes five polytrauma centers and three Centers of Excellence for Mental Health and Post Traumatic Stress Disorder (PTSD) fully operational this year to care for those returning from Iraq and Afghanistan, including those with TBI. An estimated one-third of veterans returning from Iraq and Afghanistan are facing mental health challenges, and up to 300,000 troops are expected to return from Iraq suffering from TBI. [GAO, 11/06; PBS, 2/18/07]
To ensure a seamless transition from the Defense Department to the VA, particularly for veterans suffering from TBI or PTSD, the bill permits the Department of Veterans Affairs to transfer up to $15 million for a joint program to improve access to care.
Develops and operates a toll-free telephone and web-based hotline for veterans to report on deficiencies in VA medical facilities and care.
Strengthens Our Military
Provides better barracks, housing and training facilities when troops return from combat through an unprecedented $21.4 billion investment in military construction, family housing, and BRAC ($207 million more than the President’s request).
Provides funds to grow our military forces and begins the process of adding 65,000 Army, 27,000 Marine, and 9,000 National Guard and Reserve troops.
Fully funds the 2005 base realignment and closure process (BRAC) at $8.2 billion. Supports the relocation of 70,000 troops from bases in Korea and Europe.
Enhances Accountability to Stop Wasteful Spending
Increases funding for the Inspector General for VA to improve services for veterans and their families and to prevent and deter potential waste, fraud and inefficiencies.
Sallie Mae replaced Chief Executive Officer Tim Fitzpatrick with C.E. Andrews, its chief financial officer, as the company prepares for a planned $25 billion takeover by a group led by J.C. Flowers & Co.
Fitzpatrick will serve as an adviser in the next few weeks during a transition, Reston, Virginia-based Sallie Mae said today in a statement. Sallie Mae, formally known as SLM Corp., is the largest U.S. student-loan provider.
Sallie Mae on April 16 accepted a buyout offer from J.C. Flowers, JPMorgan Chase & Co., Bank of America Corp. and Friedman Fleischer & Lowe LLC. Sallie Mae faces possible cuts in government subsidies paid to lenders and has been among student- loan providers investigated by New York Attorney General Andrew Cuomo for conflicts of interest in relationships with colleges.
“The Sallie Mae board sought and received assurances from the Flowers group that Mr. Fitzpatrick’s departure would not impact their plans to proceed with the acquisition,” SLM said in the statement. The buyout is scheduled to close by the end of this year.
From Education and Labor Committee Chairman George Miller:
Chairman Miller Statement on Resignation of Sallie Mae CEO
WASHINGTON, D.C. – U.S. Rep. George Miller (D-CA), the chairman of the House Education and Labor Committee, issued the following statement today on the announcement that Sallie Mae CEO Thomas Fitzpatrick has stepped down.
“Mr. Fitzpatrick’s abrupt departure suggests that the lending industry is beginning to recognize that business as usual is no longer acceptable at Sallie Mae or any other company participating in the federal student aid programs. However, while new leadership in the industry is certainly welcome, the fact remains that simply replacing individual executives won’t stop the corrupt practices that Congress and state attorneys general have recently uncovered.
“In addition to cleaning up the relationships between lenders and colleges – as the House recently voted to do – we must also cut the excessive subsidies paid by the federal government to lenders and use that money to help students and families pay for college. Indeed, the proof that the industry is awash in wasteful taxpayer subsidies can be found in the news, reported by wire services this afternoon, that Mr. Fitzpatrick will leave Sallie Mae with an outsized $4.1 million severance package.”