Rep. Jose E. Serrano Holds a Hearing On the Fiscal Year 2009 Budget for the Department of the Treasury

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Rep. Jose E. Serrano Holds a Hearing On the Fiscal Year 2009 Budget for the Department of the Treasury

HOUSE COMMITTEE ON APPROPRIATIONS, SUBCOMMITTEE ON FINANCIAL SERVICES AND GENERAL GOVERNMENT HOLDS A HEARING ON THE FISCAL YEAR 2009 BUDGET FOR THE DEPARTMENT OF THE TREASURY

MARCH 5, 2008

SPEAKERS: REP. JOSE E. SERRANO, D-N.Y. CHAIRMAN REP. CAROLYN CHEEKS KILPATRICK, D-MICH. REP. C.A. DUTCH RUPPERSBERGER, D-MD. REP. DEBBIE WASSERMAN SCHULTZ, D-FLA. REP. PETER J. VISCLOSKY, D-IND. REP. ROBERT E. "BUD" CRAMER, D-ALA. REP. ADAM SCHIFF, D-CALIF. REP. MAURICE D. HINCHEY, D-N.Y. REP. DAVID R. OBEY, D-WIS. EX OFFICIO

REP. RALPH REGULA, R-OHIO RANKING MEMBER REP. VIRGIL GOODE, R-VA. REP. MARK STEVEN KIRK, R-ILL. REP. RODNEY ALEXANDER, R-LA. REP. JERRY LEWIS, R-CALIF.

WITNESSES: SECRETARY OF TREASURY HENRY M. PAULSON JR.

[*] SERRANO: Good morning. The subcommittee will now come to order. Today, the subcommittee is pleased to welcome Henry Paulson, secretary of the treasury, for his annual appearance before our subcommittee.

As we all know, the secretary of the treasury occupies an important position in the federal government serving as a policy advisor to the president on a broad range of domestic and international economic issues.

In addition, the secretary's responsibilities as department head cover a range of important functions: administering the U.S. public debt, issuing federal government payments, collecting the vast majority of the federal government's revenue, working to prevent money laundering, and many other important responsibilities.

Some examples of the secretary's recent work include helping to formulate and administer the economic stimulus package and working to counter the rise in foreclosures associated with the subprime mortgages. I look forward to discussing these issues today.

The issue of subprime mortgages, which this subcommittee addressed at a hearing last week, is a huge concern not only in our particular district but throughout the country. Though our subprime loans have in many cases allowed low- to moderate-income families to experience home ownership for the first time, it is also apparent that in a great many cases, borrowers were not fully informed about the terms of the loan.

All consumers are at risk at being victimized by financial predators; however, it is often our most vulnerable population who bear the brunt of these crimes. Each year, countless working class parents who are struggling to achieve the American dream tragically have their hopes of upward mobility crushed by the practices of dishonest businesses.

While their plight often goes unrecognized, the enduring housing crisis has opened the eyes of many Americans to their struggles and made us all aware of the devastating effects such exploitation can have on the strength of our economy.

Hundreds of thousands of subprime loans have already reset to much higher interest rates, and approximately 2 million more subprime loans will reset over the next 2 years. Foreclosures and late payments rose in January to the highest level on record, and the median price of a single-family home fell in 2007 for the first time in at least four decades.

The rise in foreclosures has had an impact not just on families who have lost their homes -- whole neighborhoods across the country have seen declines in property value and tax bases as a result of being near foreclosed homes.

In New York City, my city -- as I noted last week -- 400,000 homes are experiencing or will experience evaluation as a result of being located near foreclosed homes. In addition, minority communities have been and will continue to be the hardest hit by the foreclosure crisis since these communities receive a disproportionate share of subprime loans. In 2006, 52 percent of the home loans that went to African-American families and 41 percent of the home loans that went to Latino famil...

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