(H.R. 1728) On the Price of Georgia amendment that would have required the Federal Reserve Board to certify that legislation, designed to help ensure that lenders only make loans borrowers will be able to repay, will not reduce the availability or increase the price of credit for qualified mortgages.
This was a vote on an amendment to H.R. 1728, the Mortgage Reform and Anti-Predatory Lending Act, offered by Rep. Price (R-GA). The amenedment would have required the Federal Reserve Board to certify that the legislation will not reduce the availability or increase the price of credit for qualified mortgages.
Price said that the purpose of the amendment was to “protect responsible borrowers.” He said it would do this by ensuring “that prime borrowers will not be punished with increased rates.” Price noted that, when the Federal Reserve testified on the impact of H.R. 1728, it “had reservations regarding the impact of this bill on access to credit. In fact, they felt that there was a significant possibility that the adoption of this bill would actually decrease the availability of credit.”
Price said there was concern that the legislation would cause it “to become more difficult for qualified borrowers to have access to affordable credit. So if the proponents of this bill don't believe it will restrict credit or raise the cost on borrowers, then they shouldn't have any trouble voting for this amendment. The amendment simply stipulates that the Federal Reserve will certify that that would be the case. But if they don't think that the bill will pass this review from the Federal Reserve with flying colors, then I think it would be time for them to reconsider whether or not this legislation is what we need at this time.”
Rep. Frank (D-MA), who chairs the Financial Services Committee, which developed the legislation, opposed the amendment. He said he was surprised “at the back-and-forth attitude some of my most conservative colleagues have toward the Federal Reserve System. On the one hand, there has been a great deal of concern, which I share, about the unlimited power of the Federal Reserve in some areas. But time and again we are being told, as in this amendment, we should yield to the Federal Reserve our constitutional power to legislate.” Frank said he had confidence in Federal Reserve Chairman Bernanke, but opposes “the notion that we would cede to the Federal Reserve the power to enact legislation . . . ”, since the Fed is not “the constitutional equal of the Congress of the United States.”
Price responded by noting “that the Federal Reserve has jurisdiction over this area. In fact, the Federal Reserve has put forward particular rules regarding mortgages. And, in fact, many of them address the very issues that are being addressed in this bill today.” He went on to say the question is: “(A)re we as a Congress going to increase the availability of credit and decrease the cost? Or are we going to simply decrease the availability of credit and, therefore, decrease the ability of the American people to realize their dream?” Frank answered that there was general agreement that credit need to be increased, but that it had to be increased “in a reasonable way.”
The amendment failed on a vote of 167-259. One hundred and sixty-three Republicans and four Democrats voted “aye”. Two hundred and forty-nine Democrats and ten Republicans voted “nay”. As a result, no requirement was added to the bill designed to help ensure that lenders only make loans that borrowers will be able to repay requiring the Federal Reserve Board certify that the legislation would not reduce the availability or increase the price of mortgage credit.