Senate Takes Up Housing Bill

ANDREA SEABROOK, host:

From NPR News, this is ALL THINGS CONSIDERED. I'm Andrea Seabrook.

Rewind the housing crisis back to late February and the political climate on Capitol Hill was totally different. Yes, there were some rumblings in the Senate about helping Americans facing foreclosure, but the bill senators came up with was voted down along party lines. That was it: pack up, go home for an Easter with the grandkids, or so senators might have thought.

Instead, their two-week recess would totally change the political dynamics of the Senate so that when they returned this week Senate Majority Leader Harry Reid had a major announcement: Republicans and Democrats had agreed on a new package to help people caught in the housing crisis.

Senator HARRY REID (Democrat, Nevada; Senate Majority Leader): Everybody, this is not April Fool's, this is serious business.

(Soundbite of laughter)

Sen. REID: This is a crisis that we have. The only way it's going to be solved is working together. The time has come for us to legislate, not continue our bickering.

SEABROOK: This sudden turnaround begs the question: what happened? What power did the two-week break have that lobbyists and political operatives didn't to change the politics of the Senate? I put this question to the two main negotiators of the new Senate bill - Democrat Chris Dodd of Connecticut and Republican Richard Shelby of Alabama, the chairman and ranking member of the Banking Committee.

I caught them together outside of a press conference and I put the question first to Senator Shelby, the Republican.

What changed over that two-week break? What did you hear from your constituents?

Senator RICHARD SHELBY (Republican, Alabama; Chairman, Senate Banking Committee): Well, I believe that when the Fed stepped in in New York and basically said, look, we got real problems in the financial sector; we cannot let Bear Stearns go under, it sent a message to a lot of us, including me, that we ought to try to do something, follow up and send a message to a lot of people in distress with their home mortgages and everything, what can we do to help you out of your problems?

SEABROOK: Senator Dodd.

Senator CHRISTOPHER DODD (Democrat, Connecticut): The answer to your question is people went home, and there's nothing like going home. And if you get out at all and start talking with people, you didn't have to have a seminar on the subject matter. I think we've had over 200 and some-odd, 50 calls in the last six or seven days in my state just to people wondering how they can get out of this mess they're in, a foreclosure potential problem.

I imagine if you get close to seven or eight thousand a day nationwide occurring every day, people begin to hear. And it goes beyond just houses. I think that's the important point as well. This is affecting a lot of other aspects of people's lives.

SEABROOK: Lots of senators had this same experience on their break.

Senator JOHNNY ISAKSON (Republican, Georgia): I did 47 events in 19 counties in 12 days.

SEABROOK: This is Georgia Republican Senator Johnny Isakson. In his whirlwind travel over the recess, he says, he heard from Georgians about two things:

Sen. ISAKSON: Price of gas, what are you going to do about the housing crisis. That was it. That's what everybody wanted to talk about, that's what was on their mind. And I think that's pretty much true around the United States of America. And I think that was a huge help that that break came when it did when the Senate refocused on getting about the people's business.

SEABROOK: Isakson says it became painfully clear to him that the housing crisis is spreading beyond the people losing their homes. In his meetings he heard from others as well.

Sen. ISAKSON: People who are not in trouble - they don't have a subprime loan, they don't have an adjustable rate - they're not in trouble but they have a home and the home next to them has been foreclosed on and it's vacant and the grass is growing and the lender is trying to sell it for a 30 percent discount. They're concerned about the value of their home.

SEABROOK: So it turns out a big factor in changing the politics of the Senate was real people. People losing their homes, people whose neighbors are losing homes, people whose jobs are in housing - people like Bill Spinelli.

Mr. BILL SPINELLI (Titan Custom Homes Inc., Naples, Florida): We went from very, very, very good times - probably too good - to clearly the most difficult housing environment I've seen in my career.

SEABROOK: Spinelli runs a new homebuilding business in Naples, Florida, one of the hardest-hit regions in the country. At its peak his business employed 36 people; now it's down to just six. Spinelli says the city of Naples is losing population - almost unheard of in Florida - and he's just trying to survive. So the message, Spinelli says, to lawmakers in Washington:

Mr. SPINELLI: Please help. Anything they can do is really, it's at the juncture where anything they can do that will create a more stable demand for housing and solve this oversupply and foreclosure problem, please help.

SEABROOK: Now, to get an idea of what kind of help there is in this new Senate legislation, I'm joined by Brian Naylor, NPR's congressional correspondent. And Brian, what's actually in the bill?

BRIAN NAYLOR: There is some money for counseling, you know, to help people get through this - maybe find another low-cost mortgage. There's money in the bill that would allow state housing agencies to provide low-cost loans. There's money in the bill that would allow the Federal Housing Administration to write bigger mortgages.

But the problem with this bill, I think in the eyes of many advocates, is that it doesn't really do all that much to help all those people who are facing foreclosure.

SEABROOK: Brian, what's kicking around the House side then?

NAYLOR: Well, the House is saying, you know, we're going to take up some of these provisions. We're going to try to make this bill a lot more favorable to your average homeowner who's facing foreclosure. So they're going to, for instance, push forward with a plan that would allow the FHA to refinance mortgages for those people who are maybe in over their heads.

Speaker Pelosi said that their goal is to make this bill a lot more friendly to the homeowners and shift the balance a little bit towards the homeowners away from the businesses.

SEABROOK: So, Brian, I guess it's sort of impossible to tell at this point what the actual final outcome will be.

NAYLOR: Right.

SEABROOK: But at least from here in your estimation, Brian, does this seem to be more politics than policy?

NAYLOR: I think at the moment it is. You know, we heard from all those senators. There were an awful lot of senators speaking in the Senate chamber about the need to do something, about how they heard from their constituents. But so far it's been a lot of empty rhetoric in terms of helping those who are really facing foreclosure.

SEABROOK: NPR's congressional correspondent Brian Naylor. Brian, thanks for the clarity on this.

NAYLOR: Thanks, Andrea.

SEABROOK: So at least right now the Senate bill may be more talk than action. Perhaps that's the consequence of the two parties dropping their most controversial ideas in favor of compromise. But that's not a bad thing, if you ask Senators Dodd and Shelby, the Democrat and Republican at the top of the Banking Committee.

Dodd says even symbolic action is action.

Sen. DODD: The goal here in the end is to get confidence back, get optimism back, get capital flowing again. And that's not going to happen until people see some positive action on these fronts, and that's what we're trying to do here. This is where the common ground is. What we try to do is at least find the provisions that we could agree on and then set that up, get this ball moving and get our economy heading in the right direction again.

SEABROOK: Senator Shelby.

Sen. SHELBY: We believe the substitute we're working on is a very good first step. We know it's not a cure-all but we'll go from there and we're glad to do it in a bipartisan way.

SEABROOK: In other words, something is better than nothing. And remember the message that Florida homebuilder Bill Spinelli had for lawmakers: do anything. Transcript provided by NPR, Copyright NPR.