Galizio explains his NO vote on subprime mortgage reform
Editor's note: The following comment was posted by Rep. Larry Galizio (D-Tigard) on the earlier thread about the subprime mortgage reform bill. That bill passed the House 31-29, with three Democrats voting against and three Republicans voting in favor. Ultimately, it died in the State Senate, where the leadership failed to bring it to a vote.
I appreciate much of the discussion on HB 3603A.
I filed a vote explanation on the bill in question; although those are probably only read by opposition researchers.
For what it's worth, I'll briefly add my observations. (And I mean briefly, since I'm still a bit tired from the session).
First, it shouldn't be forgotten that coming out of this very short session are bills concerning so-called "rescue mortgages" and loan originators - both of which should be useful. These bills were products of the mortgage workgroup that is expected to continue meeting as we move toward the '09 session.
In no particular order, I voted against this bill for the following reasons:
The agency tasked to implement the policy remained uncertain as to the significance and consequences of the bill. It was described as a "vanilla bill" by one member of the agency. Not only did the agency (which pushed hard for a much more comprehensive and stronger legislation) view the bill as tepid, and express uncertainty of its impacts, they admitted that they didn't necessarily have the expertise in-house to properly implement the legislation.
Second, the bill was actively opposed by the very consumer groups that worked the hardest to get mortgage lending reform this session. All legislators received an email from AARP opposing the bill; additionally, OSPIRG was essentially neutral, if not hostile to the bill. And Our Oregon (which walked out of the mortgage work group months earlier) came out with tepid support at the eleventh hour.
Third, the bill wouldn't have done that much. As has been expressed in this discussion, the bill was a last-minute watered-down collection of "reforms." This doesn't mean that it was completely useless, but the benefits were outweighed by the costs of passing the bill.
And this last point might be one of the most important areas where we find disagreement among those seeking mortgage lending reform. My view, one not shared by the bulk of my colleagues in the House, was that passage of this weak, vanilla bill would provide the mortgage industry the evidence they needed to argue against doing anything more in 2009. This is certainly a debatable point - and I respect my colleagues whom came down on the other side of this debate - but that was my conclusion. Since the rescue mortgage and loan originator bills came from the work group and passed with overwhelming support, it's more difficult for an industry lobbyist to point to those bills as evidence that mortgage reform was complete. In contrast, had 3603A passed out of the Senate on a vote that was as split as the one in the House, then it would have been much easier for the industry to point to 3603A as "the bill that represented a tough stance against the industry" and therefore one that "took care of mortgage lending reform in Oregon."
There are other political reasons that this effort may have been doomed from the outset, but it's not worth going over those again.
As a member of the Consumer Protection Committee, I'm gravely disappointed that we weren't able to come out with a robust set of reforms to confront this real set of issues. Unfortunately, this problem isn't going away anytime soon.
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Feb. 24, 2008
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Feb 24, '08
We should talk about why the bill was "watered-down" in the first place.
It was "watered-down" because the stronger bill (backed by Westlund and Merkley) was sent to Ways & Means where chairman Kurt Schrader killed it. So, the new "watered-down" bill was created without anything that required a referral to Schrader's committee.
Kurt Schrader killed the mortgage reform bill. Simple as that.
9:50 a.m.
Feb 24, '08
Jack is correct and that context is critical to any meaningful discussion of 3603 and it's brief life in this special session.
Feb 24, '08
I disagree with Jack's assessment. The "stronger" bill died for many reasons, only one of which was its larger price tag. And it's not just Schrader's committee. He is a "co-chair" of Ways and Means. Westlund's bill may have been good election year politics but it was too complex and rife with unanswered questions and potential unintended consequences. Bottom line: it wouldn't have passed on the floor, so like many many bills, it stayed in committee. The "watered down" bill that passed the House couldn't even make it through the Senate. The much bigger bill never stood a chance.
11:22 a.m.
Feb 24, '08
The Oregon Bankers Pac, which historically gives more money to Republicans, has spent a fair amount of cash in both Democratic caucuses to try and kill or water down this kind of legislation. $34,000 for Democrats versus $5000 to Republicans since the last election cycle.
It will be interesting to see how they spend their money going forward.
Feb 24, '08
I agree with Sal's position on public financing, but he's over-connecting the fate of every bill to campaign contributions. Is it possible that some bills that have good underlying intent are poorly written and therefore should fail? Don't throw the Democrats under the bus to just to suit the Independent Party.
11:46 a.m.
Feb 24, '08
I didn't say that the fate of every bill is tied to campaign contributions, but it seems clear that the bankers are spending their largesse to help block or water down bills like this, and there are several influential small business lobbyists who agree with me.
Also, please show me where I've thrown any Democratic candidate "under the bus"? All I'm saying is that the Bankers used to heavily fund Republicans and now they are heavily funding Democrats.
Campaign money gravitates towards power, and right now the Democrats have that power.
I won't name names, but the key quote I've heard about the need for campaign finance reform came from a Democratic legislator: "We need campaign finance reform while the Democrats we've elected are still acting like Democrats".
11:54 a.m.
Feb 24, '08
It's worth mentioning that I take Rep Galizio's explanation at face value. What he said about the lack of support from the consumer advocates is true. The bill was a reasonable incremental step, but inadequate given the crisis we are facing as a result of the bubble these lenders created in the subprime mortgages.
The real question is why couldn't a stronger bill gain traction? Was it unintended consequences, as my latest anonymous critic asserts, or was it opposition from the lending industry, as the media coverage around this issue has asserted?
Feb 24, '08
American Consumers do need help in regards to their Mortgage terms, esp if they're stuck on a Subprime ARM mortgage that is approaching double digit interest rates! Think about it, due to our economy, most are making the same or less than what they did just a few years back, then your mortgage payment goes up $500.00, and you're trying to raise a growing family on top of that! Its no wonder why their is so many foreclosures today!
The problem is that mortgage borrowers were sold (even pressured) on an Adjustable Rate Mortgage just a few years back, with the goal that they would be able to refinance within a few years.. The problem is that 95% of these subprime lenders either went out of business, or raised their credit criteria so high, that most challenged credit consumers simply have not been able to improve their credit enough to be in sync with their increased stringent credit guideines of today. In a way, the B+C challenged borrowers, really are the victims.
For Indiana borrowers, our website, has access to the few mortgage companies that can still help subprime (or challenged credit) borrowers, and we do have a network of mortgage companies that can deal with recent bankruptcies and bad credit, but for the average borrower, the feat of finding such a mortgage lender themselves is truly a needle in a haystack, and can be quite disheartening.
http://www.indiana-wholesale-loans.com/FindYourRate.html
2:25 p.m.
Feb 24, '08
It may have been Kurt Schrader, but that didn't stop The O from making Merkley the Loser on their front page...another great example of failure through compromise!
Feb 24, '08
TJ said: ...another great example of failure through compromise!
How is that? Had the bill been less "watered down", would it have gotten out of committee and received 31 of 60 votes in the House and 16 of 30 in the Senate? The narrower version barely passed (31 votes I think) in the House and didn't even get a hearing in the Senate. How would "no compromise" lead to more support?
Or do I missunderstand your point?
4:18 p.m.
Feb 24, '08
Or do I missunderstand your point?
No, you understand it perfectly. Had it been Speaker Novick instead of Speaker Merkley then TJ would be praising it. None of the rest matters.
Feb 24, '08
Unfortunately, the O was right. Merkley was ineffective at best during this session and alienated many of his fellow democrats. Not a good session for Jeff. If anything, I think Novick picked up the quiet support of many legislative democrats.
7:59 p.m.
Feb 24, '08
"Or do I missunderstand your point?"
Yes and no. Did you read Galizio's column, above? He says essentially "why bother?" It was too weak a bill to make that much of a difference. A stronger bill sounds like it might have garnered his support, and then Merkley perhaps wouldn't have had to fight for GOP votes.
But no, my point was actually: why compromise and lose, when you can stick to your principles and lose just as easily? And I found it very interesting that Mr. Speaker was said to have "burned bridges." That sounds somewhat off-message...
8:00 p.m.
Feb 24, '08
"No, you understand it perfectly. Had it been Speaker Novick instead of Speaker Merkley then TJ would be praising it. None of the rest matters."
Adlai Hominem, right on cue.
11:42 p.m.
Feb 24, '08
Um, TJ maybe you should actually read the words in the Oregonian, not just the headlines and the pretty graphics.
I'll copy and paste for you:
So... Merkley's a "loser" because he was working too hard trying to get a mortgage reform bill through the Senate, because he played hardball with Republicans, and because he took some time off from the campaign to actually govern for a bit.
If working hard, kicking Republican ass, and being a responsible legislator is being a "loser"... I'll take that "loser" every single day, and twice on Tuesdays.
Do I wish the mortgage reform bill were stronger? You bet. Do I wish the weaker version hadn't been killed by the Senate? You bet. But Jeff Merkley got the job done on his side of the building -- even after three Democrats bailed out. Exactly the kind of guy we should be sending to the U.S. Senate.
Full disclosure: My company built Jeff Merkley's website, but I speak here only for myself.
1:07 a.m.
Feb 25, '08
You claim something that isn't there. It doesn't say he burned bridges with Republicans; it says he burned bridges. THEN they describe how he pissed off Republicans, separately. The O certainly isn't the only place that I've been told Merkley pissed off members of his own party as well.
The "hardball" part is fine. But you skim right over what made it a bad play: the time for "hardball" was with the original Westlund bill as Merkley picked it up. That one "defeated" by the venemous hand of the mortgage industry, the compromise bill was the one he tried to push fruitlessly with a disinterested Senate.
Listen to his caucus; Larry Galizio is telling you something:
He voted the bill down because it was too weak. That was also the criticism of the main public interest groups who were supporting the legislation. Merkley was playing from a retreated hand to begin with, and sucked all his support out from the bargaining. Then he took a bill he said he knew was dead, and pushed his colleagues in the Senate anyway.And you say this is the guy we should send to the Senate? The head of a political body running 30% approvals, bargaining from weakness and failing to even get his fallback passed, and annoying his caucus in the process? That guy?
If you can manage to get rebuttal time with everyone who gets the Sunday Oregonian delivered to their door, you might persuade 10-15% with your spin job of the cover shot. Everyone else will take this image away from today's paper: Jeff Merkley - Loser. Not necessarily the truth, but 100% NOT the review he was looking for coming out of the session and back into the primary race. I don't think it's spinnable, your valiant try notwithstanding.
9:53 a.m.
Feb 25, '08
At the risk of interrupting TJ's latest anti-Merkley smear attempt, I'd like to personally thank Rep. Galizio for engaging here and for his thoughtfulness in both his vote, and his response to us.
Maybe we should start a PAC...Armchair Quarterbacks for Galizio
Feb 25, '08
I won't name names
I wish you would, Sal, because it would make your point stronger. I'm tired of people claiming that some lobbyist or business group "killed" the bill. Lobbyists have zero power over the fate of bills; all power rests in the hands of legislators. Yet even legislators bemoan the "power" of lobbyists, while letting their colleagues off the hook.
Who killed/weakened the bill? Was it Schrader? Merkley? Who received money from "mortgage broker lobbyists" and also voted against the bill? We, the voters, can make Democrats act like Democrats, but only if we hold them accountable for their votes. So please start naming names.
10:20 a.m.
Feb 25, '08
Full Disclosure: TJ's blog is listed by the Novick campaign as an official endorsing organization.
10:40 a.m.
Feb 25, '08
no shit, Kev. That news is what, 10 months old now? I don't work for them, and to date if I've gotten $50 in ad space I'd be surprised. I've gotten more from causes I hate.
I have no affiliation with the campaign. I am a 100% independent voice for Novick, as a citizen of Oregon. There is no ulterior motive, sorry. Your earnest disclosure seems somewhat...clintonian.
Feb 25, '08
Anytime the AARP, OSPIRG and industry lobbyists are aligned – as they were in failing to support the final version of HB 3603 – there's plenty of room for interpretation of the situation. Rep. Galizio's honest explanation of his vote vividly demonstrates how widely those interpretations varied among Democratic lawmakers.
Regardless of your opinion, though, certain factual claims are simply inaccurate, and Jack and Kevin's claims about why SB 1090 did not come out of Ways and Means fall squarely into that category.
Jack claims:
"[T]he stronger bill . . . was sent to Ways & Means where chairman Kurt Schrader killed it. . . . Kurt Schrader killed the mortgage reform bill. Simple as that."
Kevin claims:
"Jack is correct."
Actually, both are mistaken.
But you don't have to take my word for it. Here is the Chair of the House Consumer Protection Committee, explaining why "the stronger bill" -- which passed out of the Senate Commerce Committee -- did not come out of Joint Ways and Means:
"Senator Westlund has a bill on that, Senate Bill 1090, that is in Ways and Means. We on the House side were very unsure whether we could pass that particular bill because it addresses a big concern in ability-to-pay. But the ability-to-pay sections we felt, on the House side anyway, myself talking to many members, really didn't feel we could pass that on the House side."
Feb. 18, 2008 Hearing in the House Committee on Ethics, Elections, and Rules http://www.leg.state.or.us/listn/ (at approx. 14:20 of tape)
Also for the record, Sen. Schrader voted for SB 965 in 2007, which contained an ability-to-pay requirement for mortgage lending and was supported by AARP and OSPIRG.
11:29 a.m.
Feb 25, '08
Statements by members of the House don't factually alter WHAT happened in the Senate any more than my claiming that the Moon is made of green cheese alters what the Moon is made of. At best, statements by members of the House can give context to WHY things happened in the Senate.
6:53 p.m.
Feb 25, '08
Let's just acknowledge that the subprime mortgage mess is a very complicated puzzle, and one that was unlikely to be solved in a 30 day session.
There are some serious moral hazard issues here, involving both lenders and borrowers.
"Consumer Service", posted above, looks suspiciously like an ad, and going to the website, it looks like a scam. There ain't no 4.95% mortgages available, esp. not for anyone with a subprime.
1:59 p.m.
Feb 26, '08
I think we should remember that the Oregon Senate is also controlled by Democrats. What it seems like to me (a Novick supporter, yes), is that Merkley showed some pretty poor political acumen by pushing a bill (any bill) through the House without consulting with Senator & Senate President Courtney about the likely fate there.
If the bill was going to be killed, it seems like there were other areas where things could actually be accomplished. As it is, any deals made to get this through the House were for naught. Oregonians get nothing in terms of relief from predatory lenders and all Merkley gets is a press release/email of questionable veracity.
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