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2005 Ron Paul Chapter 109
Not linked on Ron Paul’s Congressional website.
Congressional Record [.PDF]
Amendment No. 6 Offered By Mr. Paul — Part 1
26 October 2005
2005 Ron Paul 109:1
Mr. PAUL. Mr. Chairman, I offer an amendment.
The Acting CHAIRMAN. The Clerk
will designate the amendment.
The text of the amendment is as follows:
Amendment No. 6 offered by Mr. PAUL:
Page 64, after line 12, insert the following
new section:
SECTION 117. ELIMINATION OF AUTHORITY TO
BORROW FROM TREASURY OF THE
UNITED STATES.
(a) FANNIE MAE. — Section 304 of the Federal
National Mortgage Association Charter
Act (12 U.S.C. 1719) is amended by striking
subsection (c).
(b) FREDDIE MAC. — Section 306 of the Federal
Home Loan Mortgage Corporation Act
(12 U.S.C. 1455) is amended by striking subsection
(c).
(c) FEDERAL HOME LOAN BANKS. — Section 11
of the Federal Home Loan Bank Act (12
U.S.C. 1431) is amended by striking subsection
(i).
The Acting CHAIRMAN. Pursuant to
House Resolution 509, the gentleman
from Texas (Mr. PAUL) and the gentleman
from Massachusetts (Mr.
FRANK) each will control 5 minutes.
The Chair recognizes the gentleman
from Texas (Mr. PAUL).
2005 Ron Paul 109:2
Mr. PAUL. Mr. Chairman, I yield myself 3 minutes.
(Mr. PAUL asked and was given permission
to revise and extend his remarks.)
2005 Ron Paul 109:3
Mr. PAUL. Mr. Chairman, my amendment is straightforward. It cuts off a
line of credit to the Treasury. The
GSEs have a line of credit of $2 billion.
It is said that it is not important because
they never use it. The answer
really to that is if they never use it,
why leave it on the books. But we do
know they indirectly use it. It has been
described as a subsidy, because the
GSEs can go into the market and get a
discount on their loan costs; therefore,
they can out-compete the private sector.
My amendment merely eliminates
that line of credit, puts a greater burden
on the marketplace to regulate the
GSEs rather than depending on regulation.
2005 Ron Paul 109:4
I think Members can see there is a problem with our GSEs. The debt is
horrendous. Today, the administration
sent a letter around and said that the
debt of the GSEs totals $2.5 trillion,
and they also guarantee in addition
$2.4 trillion. That adds up to more
money than the Federal Government
has borrowed. So it is a tremendous
amount of money and credit that is in
the system; and people have become
frightened about this, including chairman
of the Federal Reserve Board,
Alan Greenspan.
2005 Ron Paul 109:5
But what we are doing here today is not addressing the real problem: Why
is it out of control? Why is there a financial
housing bubble that everybody
is afraid is going to undergo a severe
correction?
2005 Ron Paul 109:6
One of the major reasons is the fact that it has this special line of credit.
So if we want to address the real cause
of the problem, we have to eliminate
the line of credit. So it rather amazes
me that we do this much legislating
without addressing the real cause of
our problem.
2005 Ron Paul 109:7
Of course, there are other things that contribute to the housing bubble,
something that we cannot deal with
today, but the fact that there is easy
credit and low interest rates, interest
rates below the market level, that is
then directed into the housing market.
This also contributes to the size and
the scope of the borrowing capacity of
the GSEs.
2005 Ron Paul 109:8
Also in this bill, of course, we are adding into this a brand new housing
program which is said to probably involve
another billion dollars in the
next 2 years. I guess it is not surprising
when The Wall Street Journal editorializes
against this. Unfortunately,
they are not very kind. They say this
bill is another “Republican policy embarrassment”.
2005 Ron Paul 109:9
This housing bubble, a housing program that we are starting up, how do
we finance it? Well, we tax the GSEs.
Instead of arguing the case for the
marketplace and letting people earn
money legitimately without subsidies,
what we do, we keep allowing the system
to continue. They do make profits,
and then we tax them. We are talking
about an additional tax, and this might
very well be the reason the administration
has come out against this bill, because
of this new tax.
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