By Eugene T. Lowe
February 2, 2009

CD and Housing Committee Hears from House Financial Services Committee Chair Barney Frank

By Eugene T. Lowe

House Financial Services Committee Chair Barney Frank met with the Conference of Mayors Community Development and Housing Committee January 18, discussing a wide range of community development and housing issues.

The Committee also heard presentations on mortgage foreclosure, the neighborhood stabilization program, and a land cooperative involving eleven small cities. Chair of the Community Development and Housing Committee Oakland (CA) Mayor Ron Dellums served as moderator of the meeting.

Frank began his presentation to the mayors by explaining the reasons why financial institutions receive support. Although it is unpopular, he said that, "More has to be provided to financial institutions." The popular view is that it is unfair to give more to the wealthy. But, Frank said, "An important thing we do is to avert disaster. We are perceived to be doing things for the wealthy and not enough for the average citizen. We should, however, do more to help the average citizen; we must help construct a safety net."

Specifically, Frank said that we need a "renewed level of activity." He added that we must get "back in the business of building decent affordable housing that people want to live in." Rental housing must be provided and programs need to be in place that will give mayors options. One requirement should be the replacement of housing that is demolished.

As for municipal bonds, Frank said that cities are paying more and having a difficult time because the insurers "messed up." He reported that he is working to help municipal bonds work as they should.

With respect to the economic recovery bill that had just been released, Frank said housing and community development programs received more direct payment to cities than any other program area in the legislation. He was especially pleased with the $5 billion for capital improvements in public housing. Beyond economic recovery and looking to the future, he said, "We must make a serious examination of the military budget."

Chairman Frank also spoke of his legislation on TARP, the Troubled Assets Relief Program, which would restrict the way the second $350 billion installment of the $700 billion from the Emergency Economic Stabilization Act could be spent. He said that $50 to $100 billion would be made available to help people avoid foreclosures. He also said that the bankruptcy code that would help homebuyers facing foreclosure restructure loans will most likely become law.

Jim Carr, Chief Operating Officer of the National Community Reinvestment

Coalition, presented five priorities that would help the nation get out of the mortgage foreclosure crisis: 1) contain the current foreclosure crisis and purge predatory lending; 2) purge predatory lending from the housing markets; 3) reform regulation of the financial system; 4) reform federal housing policy; and 5) enforce fair housing and fair lending laws.

Cardell Cooper, Executive Director of the National Community Development Association (NCDA) briefed the committee on the legislative changes that need to be made in the Neighborhood Stabilization Program (NSP). The program was enacted in the Housing and Economic Recovery Act of 2008, which provided $3.92 billion to states, cities, and urban counties to acquire, rehabilitate, and dispose of abandoned and foreclosed properties. Cooper said that statutory changes should be made in the following areas to make the program more efficient and effective: program income/revenue recapture, deadline on expenditure of administrative funds, deletion of the purchase discount requirement, flexibility in meeting the 25 percent at 50 percent targeting requirement, and allowing supportive housing for the homeless to be counted against the 25 percent at 50 percent targeting requirement.

Finally, East St. Louis Mayor Alvin Parks presented highlights of his city which is working with ten other communities and their citizens in four areas: Green Energy; Environmental Clean-up of Medical, Industrial, Agricultural, and Municipal Waste Streams; Creation of several thousand jobs; and Citizen Ownership. Parks said, "The effort ties directly to the U.S. Conference of Mayors 10-Point Plan and brings empowerment and ownership to the people."