Priced Out of the American Dream

Committee on Financial Services will come to order. [Gavel sounds.] Without objection the chair is authorized to declare a recess of the committee at any time. Today's hearing is entitled Priced Out of the American Dream: Understanding the Policies Behind Rising Costs of Housing and Borrowing. Without objection all members will have five legislative days within which to submit extraneous materials to the chair for inclusion in the record. I recognize myself for five minutes for an opening statement. The American dream has long been a symbol of opportunity, promising economic freedom, homeownership, and a better future through hard work. However, for many American families today, rising costs, housing supply shortages are making those milestones increasingly difficult to achieve and hence the title of today's hearing, Priced Out of the American Dream, reflecting that reality for many. Affordability has become a serious challenge after years of harmful Biden-era policies marked by reckless spending and inflation reaching 40-year highs, leaving households to absorb the consequences of those higher prices and increased borrowing costs. In 2024 we hit an all-time high for the cost of building a single-family home, and it's only expected to grow. Short rates set to fight persistent inflation are driving up mortgage payments and borrowing has become more expensive. These pressures are squeezing household budgets and limiting opportunity. As the 2025 Financial Stability Oversight Committee annual report makes clear, economic growth is essential to financial stability. In a growing economy, rising incomes make debt more manageable, standards of living improve, and the financial system remains stable and resilient. Since the start of President Trump's second term, we've seen renewed economic momentum driven by pro-growth policies and a clear regulatory framework. Under the president's leadership, the economy is back on track, reversing the damage left by the previous administration and restoring confidence in our financial system. This stands in sharp contrast to the warnings predicted by many across the aisle just before the president's inauguration. In 2024 Moody's Analytics predicted that a Republican-controlled government would lead to 3.5 percent inflation, 5 percent unemployment, a recession, and a budget deficit in excess of 6 percent of GDP. Those warnings were echoed repeatedly by Democrats who claimed that Republicans would derail the economy. The data have conclusively disproven those assertions. Inflation came in nearly a full percentage point below forecast, unemployment did not exceed 4.5 percent, no recession materialized, GDP growth is on track for three consecutive quarters above 3 percent, and the budget deficit has projected to fall to 5.4 percent of GDP. While the broader economy has improved, affordability challenges that I outlined remain for many households. That's why Republicans in this committee continue to introduce legislation that address this challenge head-on. We have direct solutions to improve the cost of living for all Americans. Throughout the 119th Congress we've unveiled legislative proposals that work to reinvigorate our banking system, expand access to credit, and remove unnecessary regulatory burdens. Recently I introduced the Main Street Capital Access Act with Subcommittee for Financial Institutions Chairman Andy Barr to revitalize local bank formation and right-size regulation so that banks can do what they do best, lending to local businesses and communities. Late last year, Subcommittee on Housing and Insurance Chair Mike Flood and I introduced and the committee advanced with the support of Ranking Member Waters, Mr. Cleaver, the Housing for the 21st Century Act, which reduced regulatory barriers and making building homes and apartments that are making that difficult. And last night the House advanced that bill by a vote of 390 votes. In December the House also overwhelmingly passed Subcommittee Capital Markets Chair Ann Wagner's INVEST Act with strong bipartisan votes of over 300 votes. This legislation will strengthen our capital markets, promote capital formation, and ensure that America's markets remain a global leader. President Trump has been clear about the importance of addressing the cost of living for all American families and these bills reflect our shared commitment. Through our work on housing, community banking, and capital formation, we're dedicated to restoring affordability, expanding opportunity, and making the American dream fully attainable for all Americans. I look forward to our discussion today, our panel, and I yield back. I now recognize the gentlewoman from California, Mrs. Waters, for an opening statement.

Thank you, Mr. Chairman. $1.4 billion. That's how much the Trump family has pocketed since Trump returned to the White House. Whether it is through peddling crypto coins or through baseless lawsuits against news media or federal agency, one thing remains clear: the Trump family cashing in while everyday Americans are struggling. Because of Trump's failed economic agenda, families cannot keep up with the rising rents and shrinking housing options. Workers are seeing their paychecks stretched more and more as jobs grow less security and the dream of homeownership slips further away. And small business owners struggle to access capital and keep their doors open in an economy that is only working for those at the top. What is Donald Trump's response? He floats absurd ideas like a 50-year mortgage that would trap families in debt while doing nothing to lower cost. He says he wants to cap credit card rates, but he repeals limits on credit card fees and shuts down the Consumer Financial Protection Bureau. Trump's actions speak louder than his tweets. At the same time, this administration is attacking federal programs like CDFI Fund, which helps small businesses access capital. And probably the biggest drain on our economy is Trump's reckless and unlawful tariffs. They have raised the cost of everyday goods like groceries and driven up the cost of building affordable housing. You name it, lumber, steel, and other construction materials all cost more. Why, Trump? At the same time, the Trump administration's cruel attacks on immigrant workers are shrinking the construction workforce. You don't have to be a stable genius to know that when you make building materials more expensive and deport construction workers, fewer homes will be built. Exactly the opposite of what we should be doing. So let me ask a simple question that every American should ask: are you better off now than you were a year ago? Your paycheck buys less, rent is more expensive, and job prospects are less certain. Committee Democrats see this crisis clearly and we refuse to look the other way. Now, last night we worked with Republicans to pass the Housing for the 21st Century Act. This is a good first step, recognizing that we have an affordable housing program. Can you imagine me and Mr. Hill worked together and we got something done? Wow, it happened. And so, but one bill alone will not fix a crisis of this magnitude, nor can it overcome the headwinds of Trump's turbid agenda. What would really be helpful is if we could hear from the Trump administration officials charged with overseeing $7.6 trillion of the mortgage market. But that's not going to happen. Director Polte is apparently too busy making false allegations against Trump's political enemies, unlawfully installing himself on the boards of Fannie and Freddie, and pitching terrible and just plain dumb ideas like forever mortgages. And where is the acting director of the CFPB, Mr. Chairman? The agency that returned $21 billion to Americans who have been ripped off by Wall Street. The agency that used to fight on behalf of veterans and students against predatory lenders. Well, Acting Director Vought may be too scared to come before this committee. And I'm pleased to see several members of the CFPB union, NTEU 335, who took leave to be in the audience today. Mr. Chairman, Americans' families need a sustained federal investment in housing. We need strong oversight of consumer financial products and services so Wall Street follows the rules. We need real accountability so that access to capital is based on merit and opportunity and not wealth and connection. Trump promised Americans a quote, "golden age," but everyone now sees that he really meant a golden age for the Trump family, his family, and billionaire friend. Committee Democrats instead are prioritizing hardworking Americans over billionaires. We're demanding policies that lower cost, expand access to capital, and protect consumers. But simply, we want everyone to have a real shot at the American dream. I yield back.

The gentlewoman yields back. Today we welcome the testimony of Mr. Brian Brooks, the chairman and CEO of Meridian Capital Group; Mr. Kevin O'Leary, chairman of O'Leary Ventures; Mr. Stephen Moore, co-founder of Unleash Prosperity; and Darrick Hamilton, a university professor at the New School and the chief economist at the AFL-CIO. We thank each of you for taking time to be with us. Each of you will be recognized for five minutes to give an oral presentation. Without objection your written statements will be part of our record. Mr. Brooks, we'll start with you. You're recognized for five minutes.

Well, Mr. Chairman, Ranking Member Waters, and members of the committee, thanks for having me today. It's great to see so many of you again. Most Americans know, as you said, Mr. Chairman, that everything got more expensive over the past five years as the country experienced the highest inflation since the 1970s. And house price inflation was dramatically worse than inflation as a whole. Between 1991 and 2025, U.S. home prices increased at literally twice the rate of background inflation. And prices of houses are compounded by high prices for credit. Interest rates remain persistently high and regulatory pressures have reduced credit supply to a point that is almost as significant as the problem of housing supply itself. So today I'll focus on several specific dimensions of this problem. First, let me start by addressing the housing supply deficit. We are about five million units short of what would be required to support total housing demand in this country. And one reason is the magical thinking of rent control. I live in Los Angeles, where I recently saw a building on the side of a decrepit or a billboard on the side of a decrepit building that literally says, "Rent control, an LA tradition since 1919." And LA's housing cost has been one of the highest in the nation almost that entire time. Is this in spite of rent control or is it because of it? In some cities with rent control laws such as New York, where my company is headquartered, regardless of a building's operating expenses and maintenance or repair needs, not only are annual rent increases capped for existing tenants, but the rent can't even be increased when an old tenant moves out and a new tenant moves in. As a result, building owners, including many of my firm's clients, can predict with incredible accuracy the day on which the expenses of the building will exceed the building's income. And on that day, there is no further capital available to perform necessary maintenance, meaning that small deferred repairs turn into major structural problems. And as we learned in 1970s New York, the building then fails, it's taken over by either the bank or the city, and the disaster becomes a taxpayer problem without any tenants being any better off. Rent control deters investors from building new housing units because they can't recoup their investment. So rents rise in those cities due to shortages, while rents are stable or even falling in places without rent control laws, places like Austin, Dallas, Denver, Phoenix, which have experienced building booms. Then there are the local environmental, permitting, climate mandate, zoning rules. I mention again, I live in Los Angeles, about five miles from the Eaton Fire burn zone that destroyed almost 7,000 structures. More than a full year after that devastation, construction has begun on only about 7 percent of those burned-out properties and even fewer in the Palisades fire area. LA's complicated overlapping rules on an array of environmental, fair housing, energy efficiency, and similar issues may not explain all of that slow-rolling tragedy, but it's undeniable it's a significant part of it. The federal government can actually address all of this. Some of what this committee passed in the Housing for the 21st Century Act is a great start, but there's more. The Housing and Urban Development Department distributes tens of billions of dollars in state and local grants. Those funds require a finding that local policies promote the construction and availability of housing. HUD could declare that some of these rent control and permitting ordinances in fact reduce the construction and availability of housing and refuse to subsidize states that pursue these policies. HUD also has the power under Section 8 and various other statutory provisions to revoke approval or withhold funding to localities that pursue policies that reduce the supply of housing. HUD could further consider preempting state and local rent control, environmental review, climate change, and other anti-housing laws to the extent that they would apply to HUD-insured mortgages. The affordability situation, especially in our blue coastal cities, is dire enough that all of these options have to be considered at this point. Now, let's talk for a moment about federal banking policy, something that all of us know well. Since President Obama signed the Dodd-Frank Act in 2010 and accelerating during the last administration, federal banking policy has sharply reduced banks' role in housing finance. Non-banks currently originate the large majority of all mortgages, and those loans that are made by banks usually wind up on the government balance sheets of Fannie Mae, Freddie Mac, Ginnie Mae, or the VA. At this point only about 10 percent of mortgage credit risk is actually borne by the private sector. Dodd-Frank is partly to blame since it imposed a series of rules that disincentivized mortgage lending as a banking line of business. But separately, bank supervision, including by my old agency, the OCC, led banks to be very wary of lending to apartment owners and developers. Time and again, those of you who speak to community banks will hear the story of how over the last five years, the OCC, the FDIC, and the Federal Reserve have gone into banks and have declared that performing loans that have never had a payment default should nonetheless be charged off in an effort to make sure that they're not embarrassed by another Silicon Valley bank failure again. And that overcorrection has drawn community banks out of the sector, forcing the federal government to deal with the situation. In my written testimony I talk about a couple of other topics, which I encourage you to talk about today, including Fannie Mae and Freddie Mac and their future. I appreciate the committee's time. Thanks so much.

Thank you, Mr. Brooks. Mr. O'Leary, you're now recognized for five minutes for your oral presentation.

Thank you. Chairman French Hill, Ranking Member Maxine Waters, and members of the House Committee on Financial Services, thank you for inviting me to participate in today's important hearing. I want to use my opening statement to shine a light on an issue that impacts millions of Americans. Small businesses are the heart of the American economy. Companies between five to 500 employees create 64 percent of all jobs in America every year. If you take into account their use of supply chains to distribute their goods and services, they may be responsible for over 70 percent of all jobs created. Yet, when we create policy, small businesses are often forgotten and instead we dole out billions of dollars to the S&P 500 companies who rarely have problems accessing capital. As an advocate for small business, I see this as a gross miscalculation of resources and undermines a growing and competitive economy, which we all want. Affordability is one of the biggest challenges facing small business today and the millions of people they employ. A large portion of increased input costs are the result of radical changes in tariff policy. For decades tariff policy has been designed to be reciprocal. For example, if a European country imposes a 10 percent VAT tax, value-added tax, on American goods and services, traditionally they would have a 10 percent tariff imposed on their goods sold in the U.S. Over the last nine months, the administration has elected to use tariff policy as a political tool. I am not opposed to this. I am on the record suggesting a 400 percent tariff on China until they comply with the rules of the WTO that they entered into in the year 2000 and to provide protection for IP ownership like mine, along with resolving a long list of other grievances held against the CCP. The U.S. is still the world's largest and most successful consumer economy, so the Chinese have no option but to deal with U.S. demands. However, implementing punitive tariffs on other friendly nations and leaving them in place indefinitely has had an impact on American families, their businesses, and their customers. When tariffs are used for political leverage, the tariff percentages could change dramatically from day to day during negotiations. For example, the U.S. initially had imposed a 39 percent tariff on Swiss imports, but the tariff rate eventually landed at 15. During the brief period of instability, which has only been months, most businesses simply absorbed the cost increases and refrained from passing them on to their customers. However, some businesses cannot do this indefinitely and may need to adjust their selling prices up in order to stay in business. I suggest that the current tariff policy needs some, as I call it, fine-tuning. The main issue is this: why levy tariffs on scarce goods and services? For example, farmers need potash to fertilize crops. Why put a 25 percent tariff on potash when there's not enough in the U.S. to begin with? The same could be said for low-supply commodities such as bauxite, aluminum, and softwood lumber. The Trump administration has already taken a step in this direction. Last November the president signed an executive order reducing tariffs on crops that are difficult to produce in the U.S., such as coffee, tea, and tropical fruits, such as bananas and mangoes. Housing affordability is a pain point and it's in almost every state. A major issue, as you just heard from Brian beside me here, is permitting. One glaringly obvious problem is Los Angeles. If you believe the deficit, as Brian mentions five, Goldman Sachs out there with three million deficit of houses, there are tens of thousands of homes that were burned down to the ground in LA recently and virtually zero reconstruction has commenced. Why? This is due to antiquated regulations and bad policy. This is a self-inflicted wound and needs to be resolved immediately. Also, providing more federal and state land to build housing on will also increase supply and enhance affordability. Another policy I want to address involves the digital asset ecosystem. In 2025 the GENIUS Act was enacted, modernizing U.S. payments and settlement systems by establishing a clear regulatory framework for the operation and issuing of stablecoins. Many small businesses, notably the ones I've invested in as well, are interested in using stablecoins to reduce transaction costs. In fact, they could bypass credit cards that cost them 2.5 percent. However, for stablecoins to reach their full potential, comprehensive digital asset marketing structure legislation like the Clarity Act must also be enacted. Without clear rules of the road, digital assets including stablecoins cannot fully recognize their potential. The Senate is currently debating the Clarity Act, with one of the key issues centering on paying interest on stablecoins. The hallmark of the American economy has never been more about regulation and really it should be about innovation. Enacting the Clarity Act will enhance efficiency in the financial services sector and help reduce transaction costs and free friction up. Thank you.

Thank you, Mr. O'Leary. Your time has expired. We look forward to the question period. Mr. Moore, you're now recognized for five minutes for your oral remarks.

Thank you very much, Mr. Chairman. It is an honor to be able to testify before you all today. I just wanted to make a few opening points for this hearing. First, affordability is really the buzzword today. And this housing issue is obviously intertwined in the issue of affordability. I have some good news to report to the members of this committee, which is that if you look at what has happened in the last 12 months, we've started to turn a corner on affordability. So what we've found, and I've been tracking the Census Bureau median income data, and median obviously is the people in the exact middle, and if you look at what's happened with real median income over the last 12 months, that number is up $2,400. So that's very good news. So what that's saying is that people's incomes are rising faster than the inflation rate, finally. So we've turned the corner there. That's good news. By the way, it's also true that if you look at the people in the top 25 percent of income, I just gave the median, and then the people in the bottom 25 percent of income, even people in the bottom 25 percent of income, the poorest Americans, have seen about a 16 percent increase in real terms in the past year. So you made the point that I think is so critical, Mr. Chairman, about economic growth. And economic growth really is the solution to so many of our problems and it's certainly the solution to affordability. Point number two is that there's good news and bad news on this housing issue. It's almost a conundrum. A home is an asset. And for most Americans, the primary asset that they own is their home. And so for the 60 percent or so of Americans who are homeowners, rising home values is a good thing, not a bad thing. I've always said, if you think rising prices of homes is a bad thing, there's one thing that's a lot worse than that, and that's falling home prices. And we don't want to see that. That's what happens during great depressions and during bad times. One of the reasons that we're seeing this is good news, by the way, in terms of what's going on. In my testimony there's a chart that I think is really fascinating, that we really have become a nation of homeowners. And that is the equity that Americans have in their homes has continued to rise over the last five or six years, which is good news. And today the average equity that Americans have in their homes is about 70 percent. That means they own 70 percent of the home and the bank only owns 30 percent. And that's way up from say 2010 when people had less than 50 percent of equity. So this is good news that people are being able to own their homes. And for homeowners, it's great news. The problem is, so I own my home, when I see the value of that go up, I cheer, but then my kids, I have three kids that are in their late 20s and 30s, it's bad news because they can't own a home. And that's the kind of conundrum you're dealing with. The third point, this is really critical. Please, please, whatever you decide in terms of policy with respect to housing, please, I'm begging you, do not forget the lessons of what happened in 2008 when we crashed the economy, one of the worst downturns in the economy since the Great Depression. And this was a result of really bad, bad housing policy. I remember, Mr. Chairman, I was in this very room testifying oh, about 20 years ago. And one of the economists came in, honest to God truth, he said the chances that Fannie Mae or Freddie Mac would ever fail were one in a million. One in a million. And of course five years later Fannie Mae needed a $200 billion bailout. So Fannie Mae and Freddie Mac are not the solution to our problem. They're the ones that created the crisis in the first place. The other thing that's really critical to remember about what happened in 2008 is the number one factor behind people defaulting on their loans was the down payment on their loan. So people with low down payments tended to be the ones who defaulted. People who had equity in their home with higher down payments did not. And so I'm very wary of policies that tell people lower, lower, lower down payment because those are the people who are most likely... and by the way, you don't do anyone a favor by putting them in a home that they can't afford. You know, there's nothing worse than losing your home because you can't afford it. So that's an important point. Finally, and maybe most importantly, is that if you look at what's happening with housing prices in the United States and housing in terms of where homes are affordable and where they're not, it's mostly the big blue cities where prices are very high. So if you look at my testimony and I'm almost done here, but I'll just show you that the cities that have the highest...

Mr. Moore, we'll consult your testimony. We thank you and we invite our members... New York, San Francisco, San Diego, those states have the highest... Your time has expired. We'll get into that detail in the questions. Thank you very much for your presentation. Professor Hamilton, you're now recognized for five minutes for your oral presentation.

Good morning, Chairman Hill, Ranking Member Waters, and other honorable members of the House Committee and Financial Services. My name is Darrick Hamilton. I serve as the Henry Cohen University Professor of Economics and Policy and the founding director of the Institute on Race, Power, and Political Economy at the New School and the chief economist for the AFL-CIO. I'm here today in my capacities as a scholar to discuss rising costs and access to financial services. Rooted in these issues are asymmetries in power and economic agency. What has come to be labeled as the affordability crisis is the result of public infrastructure that is over-indexed on profit and speculation and under-indexed on investments in the American people. Over the past four decades, the top 1 percent of households have experienced a tenfold increase in their wealth, whereas the bottom have not received that, resulting in the bottom 50 percent of Americans holding about 2 percent of our nation's vast wealth. These conditions are not happenstance. They're the result of the policies that concentrated capital and power, policies that prioritize speculation and profit over productive investment, and policies that treat people as costs to be contained or managed. For instance, last summer the budget reconciliation law cut Medicaid, food assistance, subsidies to healthcare, student loans, and other essential programs while diverting nearly $4 trillion of our public investment by way of our tax code to the wealthy and corporate sectors. Our infrastructure should first and foremost serve and invest in the American people. People are more than labor inputs to a firm production process or consumer agents to whom resources might be redistributed to redress inequality in a charitable sense. When properly resourced, people are the innovative, productive agents that make dynamic contributions that benefit themselves, the economy overall, and they promote healthy, tranquil, safe, and inclusive environments. That should be the purpose of our economy. Authentic freedom is grounded in resources. These resources include housing, healthcare, banking and financial services, reproductive autonomy and agency with regards to family formation, the right to unionize and collectively bargain, good jobs, a capital foundation, access to quality education from grade school through college, and the free mobility throughout society without the threat of detention and bodily harm from a state-sanctioned terror because your identity is linked to a stigmatized group. Public investments in the capabilities of the American people are the best way to grow our economy and ensure that it is resilient and sustainable. ...empower us against predation, address our affordability crisis, and generate positive externalities and productive macroeconomic multipliers that benefit our economy overall. This approach is not new to the American zeitgeist. Between 1948 and 1979, as a result of government policy accompanied by strong unions, American productivity more than doubled while wages rose at 90 percent. That reflected an almost one-to-one relationship between growth and worker prosperity, and clearly firms benefited too. In contrast, the period between 1979 and 2025, a period defined by supply-side economics that emphasized deregulation, government outsourcing, privatization, corporate tax cuts and subsidies, and an outright assault on unions and collective bargaining, productivity continued to rise, albeit at a slower rate, but wages only rose by 33 percent. At a time when trust in Congress is near historic lows, we have an opportunity to demonstrate a governance approach that centers people as the purpose of our economy and the primary mechanism to achieve that purpose. To address our affordability crisis, perhaps we should put our trust in the American people with the resources and public infrastructure to match. Invest in our human capacities, our democratic institutions, our shared prosperity. Choose a governing paradigm that recognizes people as the best infrastructure and live up to the creed of a multiracial democracy with inclusive prosperity. Thank you.

Thank you, Professor. We'll now turn to member questions. I recognize myself for five minutes of questions. Steve Moore, let me start with you. Chairman Powell recently said that the reason why consumers are angry about inflation is because of the increase in prices that occurred in 2021, 2022, and 2023. Or in other words, consumers are still feeling the higher prices generated from that inflation shock that several of you mentioned in your testimony. He stated, though, that as real incomes rise, which is a point you made, people will feel better over time. So I agree with that. And we don't want to rehash in here, members of this committee, some on both sides of the aisle, but mostly on the Republican side of the aisle, in the fall of 2020 said, let's get back to business, take the foot off the gas of the monetary policy expansionism, and we did not support applying $6 trillion more in fiscal stimulus in the spring of 2021. We thought that was over the top vis-a-vis the pandemic and the recovery that we'd already witnessed due to what was a very V-shaped recovery. But you make a good point about real wage increases, and I think the big, beautiful bill signed into law last year speaks directly to for seniors, for overtime, for tips, for taking the standard deduction, for doubling the child tax credit, produce some of that real wage increase. Can you reflect on how you see that coming to pass this year as Americans open up their notice from the IRS and they see a bigger refund this year? Can you reflect on what you think that could do for the macroeconomy this year?

Thank you, Mr. Chairman. Quick responses to that. Number one, you're quite right that the inflation that the American people are angry about inflation, no question about it. They're very angry. Every poll shows that. They're angry about the cost of healthcare, they're angry about the cost of housing. My wife is angry about the cost of groceries. So it is at a boiling point. And the one thing I would sort of remind people is, yeah, 84 percent of that inflation that people are feeling today happened in 2021, 2022, 2023, and 2024 under the previous president. And Trump is right, inflation has actually come down. Now, we're not where we need to be. We're at about 2.7, 2.8 percent. We want to get that down to 2 percent or below. But the trend is good. And I think you heard from Secretary Bessent a week or two ago saying that the trend right now is headed to 2 percent. So that's the first most important point. The second thing I just want to quickly say is with respect to how can we bring housing prices, how can we make housing more affordable? And clearly, I think we could all agree that the mortgage interest rate is a big factor on whether people can buy a house. When I, by the way, when I graduated from college, the mortgage interest rate was 17 percent. Nobody could afford buying a house during those high inflationary times. What we're seeing now is that inflation is coming down and that will make affordability better. But the point I'm making is the single most important factor in bringing down the 30-year mortgage rate is the inflation rate today and the expectation of inflation in the future. And that's something even President Trump, who I strongly support, he thinks that if the Fed lowers short-term rates, that's going to bring long-term rates down. That's not necessarily true. So let's concentrate on keeping prices stable and the dollar strong.

Appreciate that perspective. Mr. Brooks, let me turn to you on the subject of I agree with that macro issue so much and real wages does a lot to help on the affordability issue. We've put in our package we passed last night with 390 votes, we also freed up banks' access to a greater stream of deposits, lowered and tailored compliance costs for our community banks because they make 60 percent of our one-to-four family construction loans across the country, banks under 10 billion. Can you talk a little bit with your executive branch experience about that importance of tailored regulations?

Well, thank you, Mr. Chairman. It's a great question. The idea of treating relatively small banks the same as JPMorgan is something that we've had to grapple with since 2010 in the Dodd-Frank Act and in Basel III. Freeing community banks to do what they do best, which is to make loans based on a relationship basis to credits that they truly understand with borrowers in the community, whether that's purchase money mortgages or construction loans or whatever, is a really big deal. I think the legislative move that the committee made is terrific. I would go further and say there needs to be oversight of the banking agencies to make sure that the supervisors inside of those agencies aren't penalizing banks for making the very loans that the committee wants them to make.

Right. And I do hope that under the leadership of now that we have all the Trump administration agency heads confirmed that they do that harmonized direct leadership management. Thank you, Mr. Brooks. I yield back. I recognize the ranking member, Ms. Waters of California, for five minutes of questions.

Thank you very much, Mr. Chairman. Professor Hamilton, during the pandemic, there was a lot of bipartisan support for small businesses. We had the Paycheck Protection Program that after we made sure that community financial institutions like the CDFIs and MDIs received an allocation, small businesses were able to benefit. But since then, we've seen Trump and Republicans attack a number of programs and safeguards that help small businesses. For example, for decades, CDFI Fund has received bipartisan support for all of the good ways it has supported CDFIs across the country, including in urban and rural communities. CDFIs played an important role in providing PPP loans to small businesses, especially after the biggest banks turned them down. But now Trump wants to close down the CDFI. We have to fight. We have to fight him on this. Professor Hamilton, won't that hurt small businesses trying to access capital and affordable loans to expand their business?

Absolutely, ranking member. It will not offer precision by which we need to ensure that we have economic inclusion for especially minority businesses that traditionally have not been included in the full prosperity of the American economy. So these programs have relationships, they have capabilities of steering finance in a way to promote economic inclusion, which should be consistent with achieving that American dream in a melting pot.

Thank you very much. As a matter of fact, speaking about the PPP program, the big banks basically took care of their concierge clients, used up all the money in the beginning, and we had to come back, Nydia Velázquez and I, Nancy Pelosi, and even Mnuchin, to come up with a huge allocation to get to minority-owned banks and also for small businesses. They come here and they talk about small business, and what they try to do is get us believing that they're here representing small business, but in essence, what they're doing is bringing the same old Republican arguments about rent control and other kinds of things, getting away from what we're trying to do for small businesses. Professor Hamilton, going back to former President Nixon, the Minority Business Development Agency, that is the MBDA, has helped small businesses owned by people of color and were ignored by the traditional financial system. These entrepreneurs could go to the MBDA and get legal and technical advice on how to run their businesses or access loans and capital to operate. If Trump closes MBDA, won't it be harder for small businesses to access affordable credit?

Yes. The program was designed with a purpose in mind, and we have not completely fulfilled that purpose, so now is not the time to turn away from it, now is the time to amplify it. And also, if we go back to the point that you made with regards to the PPP program, imagine the counterfactual if we didn't have it in place. Imagine how many workers would have lost their job in the midst of a pandemic if this federal government didn't ensure that if employers were to keep their workers employed, that they would receive forgivable loans. And then the point you raised, we want to make sure we have an inclusive economy, so the pivot in the midst of that allocation to go to CDFIs to make sure that businesses that might not have been as traditionally banked with the larger banks would also be able to keep their workers employed was what was good for America.

Thank you so very much. Just quickly, Trump and Republicans also want to stop the Consumer Financial Protection Bureau from collecting data on small business lending. Section 1071 of Dodd-Frank, which I and Small Business Committee ranking member Velázquez led in drafting, requires banks collect this small business loan data. It was finally implemented by the CFPB under former Director Chopra's leadership, but Trump CFPB is seeking to delay and narrow this rule. As an economist, how does the lack of transparency and data on who gets small business loans and what it rates allow discrimination to persist?

Information is power, and then also hidden information allows for discrimination, allows for things to be not transparent so that we can't address it. And indeed, the CFPB, we should also consider the origins of that great agency that we have with our government. It came about as a result of recognitions of a financial collapse...

Thank you, Professor. Gentlewoman's time has expired. Appreciate your testimony. The gentleman from Oklahoma, Mr. Lucas, the chair of our monetary policy task force, you're recognized for five minutes.

Thank you, Mr. Chairman, and thank you to all of our witnesses for being here today. The landmark reconciliation bill that Congress passed last year included a number of provisions to update and strengthen the farm safety net. And while farmers back home wait to see the benefits of these changes, the president announced the Farmer Bridge Assistance Program set to hit producers' pockets by the end of this month. Mr. Moore, I've waited a very long time to ask you an ag question. So in your very concise way, what can the farm economy look forward to with the administration and Congress working in harmony on the economy?

Well, if the question is what can you all do to first of all, we have a healthy economy right now. I mean, it is an amazing economy, one of the best I've been in this business for 40 years, this is about as good as it gets when you have all-time highs on the stock market, you've got rising median incomes, you've got falling gas prices, you've got inflation headed to 2 percent. I mean, it's a good picture and we should all feel very good about that. The one piece of advice that I would give to you all in terms of how you can promote more housing availability so that young people can buy a home is to index the capital gains tax for inflation on residential housing. So if you look at over the last 40 years, we've had about a five-fold increase in the value of houses, but about a 300 percent increase in inflation. So a lot of the people, what's happened is people are locked into their homes. People who are in their 60s and 70s, the baby boomers who may want to downsize, they may have a million and a half dollars of equity in their home, they literally are locked into their house, they can't sell it because if they do, they're going to pay a massive capital gains tax, mostly due to inflation. It's an unfair tax and we could free up millions of homes if we allowed people to index that for inflation. By the way, it's just not fair to tax people on an inflationary gain anyway.

Absolutely. And I would note when I was in the state legislature, we had a piece of legislation dealing with sales tax, and the Oklahoma Tax Commission testified before the Tax and Revenue Committee that I sat on that 40 percent of Oklahoma City's sales tax revenue was generated by non-Oklahoma City residents, which said to me that rural America drives an important part of urban America's economy, and we have to look at that whole package, and clearly administration is. Thank you. Mr. Brooks, you've testified that the excesses of the Dodd-Frank Act have significantly diminished lending by banks. What should the committee look at scaling back to ensure that banks are able to lend to grow the economy?

Well, Mr. Lucas, thank you for that question. The Dodd-Frank Act did a number of very specific things that made it hard for banks to be in this asset class. And some of them were directly in the statute, and some of them were in Basel III as the U.S. later adopted it. Let me just begin with the treatment of mortgages and mortgage servicing rights on bank balance sheets. The quintessential thing that banks do, possibly the most fundamental thing that a bank does, is they take short-term deposits and they turn them into long-term loans for homeownership. We all saw It's a Wonderful Life, that's what a bank does. In Dodd-Frank, capital stress tests and capital ratios were established that disincentivize long-dated assets like mortgage and makes it very expensive for a bank to hold a mortgage on its balance sheet. As a result, the vast majority of mortgages banks make today go to Fannie Mae and Freddie Mac and thus are taxpayer liabilities, they're not bank liabilities. So looking at capital ratios and stress tests specifically as they apply to mortgages is a way of tailoring Dodd-Frank without giving up the capital gains. That part's really important. And the only other thing I would tell you is mortgage servicing rights, that intangible economic strip of a mortgage that the banks who make the mortgage retain, became highly uneconomic to hold because banks had to hold capital against those MSRs at a very high rate. So those things made it very tough for your local $1 billion bank in Oklahoma City to be in the business.

Continue on that thought, Mr. O'Leary, in the time I have left, how would the INVEST Act scale back red tape and unlock capital for small and growing businesses?

Getting access to capital is the whole deal, actually, because if you see how small businesses, let's take a typical $50 million business that's selling consumer goods or services, their large customers may be a Walmart or a Target, whatever. When they go to their local bank, a regional bank, and say, look, I'm holding $5 million of receivables on Walmart, can you give me a rotating loan? Rarely do they get that. So they go to the hard factoring market, which today is between 17 and 23 percent. That is effectively all the profit they're going to make because on average they make 15 percent pre-tax. And sometimes it's punitive, but they have to go to those markets to afford the next order to the next Walmart. And so they start with 200 stores, they get to 2,000, the system is very broken because they're the best credit risk we have, the American consumer themselves and Walmart and Target and on and on.

Gentleman's time has expired. Thank you so much. Thank you, Chairman. Appreciate that. Gentleman from California, Mr. Sherman, who's the ranking member of our Capital Markets Subcommittee, Mr. Sherman, you're recognized for five minutes.

First, Mr. Chairman, I ask unanimous consent to include in the record a letter we received from the CFPB union, NTEU 335, urging Congress to, among other things, restore CFPB's funding. Some of the members of that union took their own time to be here and we welcome them.

Without objection. Thank you.

A number of Republicans in this room have said the economy is wonderful and the Republicans deserve the credit. Please, please continue to say that. Mr. Trump promised us that if we elected him, things would be affordable and they're not. There are two things that we could do to make things more affordable, many things, but two of them are restore the CFPB, which not only punishes those who rip off consumers but more importantly prevents others from doing so. And second, I'll be introducing legislation soon to regulate the price of all pharmaceuticals because they are a monopoly and they are a necessity. One of the focuses that I thought would be here, one of the bills that's discussed for this hearing or listed, is the idea of having large companies own single-family homes. And I know it sounds good to say that should be prohibited and I look forward to studying this market. But I will point out that only 0.6 percent of the single-family homes are owned by these large landlords and that we do need at least some homes available for rent. I represent the UCLA area, we have visiting professors, we will not be able to get them to come from Harvard to UCLA for one or two years if they're going to have to be in an apartment. I'd also point out that these firms in effect act as a backstop for builders, they build a lot of homes, they're not sure they can sell them to consumers and they've got a backup opportunity with those in this industry. And finally, an awful lot in this industry actually build the homes themselves. Mr. O'Leary, thank you for pointing out the great travesty of these crazy tariffs. They are not for fairness, they're not for opening up other markets. We've imposed tariffs on coffee and bananas just to raise a lot of revenue. We don't produce coffee and bananas here. We should tax people based on their ability to pay, not their proclivity to have coffee and bananas. John Burns, an economic consultant, indicated that the tariffs on building materials are raising the price of construction in this country by 5 percent. I am the only member of Congress that actually got to confront the president face-to-face, that was a year ago, I begged him to exempt building materials from this tariff insanity. He said he'd consider it, I guess he's still considering it because he's not doing it. Mr. Moore, you're right that we shouldn't have Fannie and Freddie the way we did back then. We don't. We have Fannie and Freddie as government agencies where they don't face the peculiar circumstance that they can take a lot of risks, make a lot of money for their shareholders, or socialize the downside. Section 8 housing vouchers are one of the most important ways in which we provide for housing, but in some cities, you just can't find a place that will rent to you with a Section 8 housing voucher, and in some cities, half of all the new voucher recipients return their vouchers unused. Dr. Hamilton, what do we do to make the Section 8 program work?

We should require people to not be able to discriminate on the basis of whether someone has a Section 8 voucher or not. That is a huge problem. Why should we exclude people based on a government program intended for them to get access to housing?

Are there regulatory burdens imposed on those who participate in the program that would discourage them?

Are there regulatory burdens imposed? Decent homes, to some extent we require that there's quality homes that the people have access to, which I think is a good thing.

Thank you. Studies indicate that 24 percent of the cost of a new family home, that's single-family, and 40 percent of the cost of multi-family development is attributable to regulatory cost at the local, state, and federal levels. Mr. Moore, what can we do to change the regulations and the zoning so that we can build a lot more units, especially apartment units?

Well, Congressman, unfortunately you all here in Congress don't have a lot of authority over what the cities are doing with zoning, but I'm a big opponent of zoning. I think it does there's no question it restricts it's a not-in-my-backyard kind of phenomenon and it's something that's really restricting the availability of homes.

One way we can push them in the right direction is the Yes In My Backyard Act, which I believe was part of the package we passed yesterday, and I yield back.

Gentleman yields back. Chair recognizes the chair of our Capital Markets Subcommittee, Ms. Wagner, you're recognized for five minutes.

I thank you, Mr. Chairman, and I thank our witnesses. The United States is a country of entrepreneurs and innovators. Trailblazers who turn ideas into successful businesses, mom-and-pop shops that grow from literally a single store into thriving enterprises. These are the individuals who have made the United States the strongest economy in the world, and their hard work deserves our support. The truth is, however, that capital is not easy to access for many small businesses across the country, especially in the Midwest. I hail from the Show Me State of Missouri, so I know. And other regions away from the big cities on the coasts. As chair of the Capital Markets Subcommittee, one of my main goals has been to address this lack of access. As you said earlier, Mr. O'Leary, it's the whole deal, access to capital. That's why I led the INVEST Act, a package of 22 bipartisan bills that will strengthen our capital markets, expand investment opportunities for everyday Americans, and provide greater access to capital for Main Street businesses. Mr. O'Leary, as an angel investor on Shark Tank and the chairman of O'Leary Ventures, you have invested millions of dollars in dozens of companies located across the United States over the last 16 years. In working with early-stage startups, investing both your time and money in up-and-coming companies, you have direct experience leading with the challenges that these businesses face. Mr. O'Leary, when you work with early-stage companies, what are some of the main challenges you hear about gaining access to capital?

Between $1 and $5 million in sales, it's virtually impossible today. It really is. And the challenge is that right after about a million, when you stop selling your grandmother and your cousins the product and people start buying it because they want it, maybe you've been successful on social media acquiring customers, that is the time when you want to support these nascent entities because they have proven their product. So one problem is when they get to $5 million, that would be when generally they need to expand both on the employee base and they need more capital for inventory because that's just at the time when the large big-box retailers, which still represent 50 percent of sales, including Amazon, require inventory and they're not going to receive cash on that for 60 days. That's why I talked about the factoring market. There is another problem, and I brought this up when we were having China hearings, exactly at $5 million of run rate on Amazon for any American consumer good product, that is when the Chinese knockoffs hit. And what you see, and it comes on Alibaba, that IP is stolen, and I've been talking about this for years.

Well, I don't have time to let you talk about it for years, sir. And we have addressed some of these issues in the INVEST Act. And you mention the INVEST Act in your written testimony. And from your experience working with companies that rely on private market investors, how could the reforms included in this package help unlock capital, increase competition, and improve options without requiring additional government intervention or a subsidy? Well, if you look at the data, 70 percent of jobs are created by the businesses you just detailed. And yet they virtually get no support in the large acts that are created, whether it's the Infrastructure Act or whatever in the last, you know, four years. I've read those acts, they're telephone books, there's nothing there for small business. And the point is, why would you not want to support at least, I would argue, 70 percent of capital should be made available to them because 70 percent of the jobs come from them. And my time's expired, I yield back, but we have done that in the INVEST Act. I thank you, sir.

Thank the gentlewoman. The chair recognizes the very distinguished gentleman from Georgia, Mr. Scott. You're recognized for five minutes. And thank you, our very special chairman of our committee. Now, Professor Hamilton, I first want to thank you for joining us. But every day the dream of owning a home in Atlanta slips further out of reach for thousands of families. And in our 2025 Atlanta Regional Commission survey confirms what many already feel.

Number one, housing affordability isn't just a talking point anymore. It is the top concern for our constituents, affecting employment, education, and economic stability. And in our Atlanta regional survey, the respondents pointed to investors who buy and rent homes as a main cause of this affordability issue. Another major factor cited in this report is rising construction costs from labor shortage... ...shortages, materials, and the availability of land. So, over the last seven years, the construction workforce in Atlanta has lost 6 percent of workers aged 25 to 52 years old. And each year we see a shortage of over 700,000 new construction workers. So, Professor Hamilton, help us out here. You have such knowledge. How are these market conditions affecting first-time homebuyers, especially young families and communities of color in cities like Atlanta?

Thank you, Congressman. The number one ingredient to purchase a home is capital. If there's a shortage of workers, the number one ingredient to attract more workers is wages. So, we have a problem of asymmetries in both power and capital. That's what we need at a high level. We need a redirection of public investments to redress that asymmetry. We need to be able to offer residents of Atlanta a capital foundation if they want to get into, in order to get into a home, which, as you eloquently pointed out, provides a great deal of other amenities beyond the living in a home itself. It becomes a capital foundation for economic agency.

Okay. I got a minute and a half. What steps can we take in this committee, in Congress, to address these labor shortages? Have you talked with our unions in the residential construction industry, which is expected to get worse with aging workforce?

As it relates to the labor market, there are a variety of things that one could do. The first thing I would say is facilitate the economic right to collectively bargain. Facilitate the capabilities of workers to bargain in unity against some of the asymmetries again with regards to power. There are other mechanisms as well. We can instill a minimum wage. We see the evidence that, you know, the rhetoric is that a minimum wage will lead to job loss. Well, we've had countless studies that have shown that there's plenty of slack by which we can raise the floor on wages for Americans to ensure that they get decent pay.

Well, let's deal with things like zoning reform. How important is that in local-federal coordination in expanding this supply of housing? Well, Atlanta is one of the fastest-growing, most dynamic areas we got. But this is our number one issue right now. We either going to survive and swim, or we could drown.

Yeah. And really quick, smart zoning is important and useful, but in short, but trying to make sure that those residents stay there.

Gentleman's time has expired.

Thank you very much, Mr. Chairman.

Chair recognizes the Vice Chairman of the full committee, the gentleman from Michigan, Mr. Huizenga. You're recognized for five minutes.

Thank you, Mr. Chairman. And zoning is a big issue. And Dr. Hamilton, we haven't had a chance to meet, but Mr. Brooks, Mr. O'Leary, Mr. Moore, good to see you all again. Location, location, location. Watchword in real estate. Well, it's also supply, supply, supply and demand, demand, demand. All right? My own family has been experienced in housing for over three generations. We have been in the aggregate business. We have been in the, for three generations, two generations have been in the ready-mix concrete and housing development business. Personally, I was a realtor after I graduated with my oh-so-employable political science degree. And my brother is currently a realtor. We have seen barrier after barrier after barrier be put up by every level of government, including with zoning, at the local level, the state level, and yes, the federal level. Mr. Brooks, you hit the nail on the head with your discussion about why local banks and regional banks are no longer holding mortgages because of a disincentive under Dodd-Frank. It has radically changed how the banking business relates to the real estate and to the housing industry. In fact, I most recently just did a 24-unit condominium project that we started just before COVID and finished, mercifully, after COVID. And I can tell you that when we went to the bank that we have done business with as a family for three generations, they wouldn't lend the money to do the real estate development. Why? Were we a bad credit risk? Did we not have enough cash in the bank as family businesses, three or four family businesses all banked there? No. It wasn't, had anything to do with that. It was the regulators thought they were overweighted in real estate. Therefore, we had to go find another bank. We did. We successfully found another local bank. And oh, by the way, three acquisitions later, we were back with the original bank that had denied us the ability to get the loan to do the development. It's just fascinating to me that people are not seeing it for all what it is about, which is really truly supply and that demand. And we have supply not matching demand right now. Mr. Moore, yesterday the House, we overwhelmingly, and congratulations both sides of the aisle for this, we passed the Bipartisan Housing for the 21st Century Act. Federal Reserve is set to have a new chairman. Just talk to me briefly, very briefly, how you believe lowering rates in the future can make housing more affordable for low-income and middle-class families.

I'm sorry, which microphone?

The lowering, your microphone, please. The lowering of interest rates. How is that going to benefit those lower and middle-income families?

Well, one of the things I wanted to say regarding this is that you mentioned zoning. And the city in the United States, there's one major city in the United States that virtually has no zoning, and that's Houston. And if you look at my testimony, guess what? That has some of the lowest-cost housing. So, there's no question that you're exactly right that zoning has really dramatically restricted the supply. You're so right, Congressman. It's all about the law of supply and demand. And when you have zoning restrictions that dramatically reduce the availability of multi-family homes, you're going to see the prices of homes rise and it's going to be harder for people like my kids to buy a house.

Yeah, mine too, by the way. They're worried about that. And interest rates certainly are a part of that affordability. Mr. O'Leary, you've been very successful both off TV and on TV with your businesses. As a job creator, what happens when government reduces outdated government impediments, including overburdensome regulations? And then likewise, what does it mean as a job creator when your taxes are lowered and for the taxes of maybe your customers as well, like we did in the Tax Cuts and Jobs Act and more recently in the Working Families Tax Cuts? How does that benefit you and the economy?

I liked your analogy on real estate when you opened your statements: location, location, location. Let me add something to that now. We face power, power, power. We don't have any. And Chinese built 511 gigs last year, 110 of it solar, the rest coal-burning plants that make electricity, 250 megawatts at a time. They're killing us. They have no regulation. The big guy says, "Put one there or you disappear in 18 months."

So, we need customers. You need customers.

I was saying, I'm trying to answer it saying you want, I want deregulation on power so I can create jobs.

Gentleman's time has expired.

If I can get power, I can create data centers. I can't do it.

Mr. O'Leary, thank you. Let's continue that power comment. It's important. Let's put it in the record. Chair recognizes the gentleman from Texas, Mr. Green, who's the ranking member of our Oversight and Investigations Subcommittee.

Thank you, Mr. Chairman. I thank the ranking member as well, and I appreciate greatly the testimony of the witnesses. Mr. Chairman, I concur with what you said about persons being priced out of the American dream. And I would add this: there are people who are not only priced out of the American dream for all of the reasons that have been called to our attention here today, but they're also priced out for another reason. And that reason is invidious discrimination, very well known as racism. This occurs when some persons of color are in financial institutions seeking a loan and they find themselves being given a loan, if they receive it, that will have terms that are less favorable, that will cost more, and they will be less favorable and cost more than persons who are less qualified than they are, but of a different hue.

We need an honest reckoning with our history and recognize what you said as true and validated with lots of evidence.

Thank you. And one of the ways that we can acquire the intelligence necessary to prove the allegations that I've made, the empirical evidence is needed. And to acquire this empirical evidence, there's a process called matched-paired testing. This is where you take persons who have similar qualifications and you send them out into a lending institution. Similar qualifications but of different hues. And you then can acquire results that will give you the empirical evidence to substantiate what I've said. In fact, we have had this done and we've acquired some of this empirical evidence, but it was a while ago. We need to do more of it. This is a problem that has a solution if we would but only embrace it. The way is here for us. The question is, do we have the will? And quite candidly, I live today to live to see the day that we'll have a hearing comparable to this to talk about invidious discrimination in lending and also the invidious discrimination associated with purchasing a home if you're a person of color. These things can be dealt with if we choose to, but we have to have the will to do it. Now, to be more specific in terms of a possible solution to this problem that has been plaguing us since the arrival of persons of color here on August 20th of 1619, here's a possible solution that actually passed the House of Representatives. It's called the Fair Lending for All Act. Under the leadership of the Honorable Maxine Waters, we were able to pass this legislation. Fair Lending for All. This bill would create the Office of Fair Lending Testing in the Consumer Financial Protection Bureau that is under assault currently. It would be charged with testing creditors' compliance with ECOA. The bill would also create criminal penalties under federal law for knowing and willful discrimination by lenders when a person is applying for credit. Doesn't matter what your color are. If you're discriminated against because of your color, you ought to pay a penalty. Currently, persons who defraud the bank will suffer a penalty if found guilty. That penalty can be a million dollars in fines and you can be imprisoned for up to 30 years. Well, no such thing exists if the bank somehow defrauds you with invidious discrimination. This bill would have, if passed, afforded persons who are found to have been discriminated against a penalty against the lender of an amount of up to $50,000 and imprisonment for up to a year. Hardly the same as what happens if you defraud the bank, but at least it would give us something that would act as a deterrent. I do believe that if we had the will, we could eliminate much of what we call invidious discrimination. But we just don't have the will. We deal with all of the other problems and people of color have to suffer them, but they also suffer from invidious discrimination in this, the great country that we all know and love. My hope is that one day H.R. 166, was the number for it last time, it will pass the House, the Senate, and be signed by a president who understands that invidious discrimination still exists.

Gentleman's time has expired. Thank you. Gentleman from Kentucky is recognized, Mr. Barr, who chairs our Financial Institutions Subcommittee. You're recognized for five minutes.

Thank you, Mr. Chairman. Mr. Brooks, welcome back to the committee. I think the testimony that you offered about the nexus between federal bank policy, overregulation of the banking sector, and affordable housing is very timely. As you know, Chairman Hill and I introduced the Main Street Act to right-size regulation so that especially our community banks can focus on the housing market and help Americans achieve the goal of homeownership. Your point that non-banks currently originate the large majority of all mortgages while banks originate the remainder, most and most of those loans wind up on government-related balances with only about 10 percent of mortgage credit risk borne by the private sector, I think is a very important point. You highlight two causes: first, Dodd-Frank disincentivizing mortgage lending, and then second, bank supervision leading banks to be wary of lending to apartment owners and developers and the negative signal that that sends. How might the Main Street Act that we've proposed help solve these problems and enhance community banks in particular their ability to help Americans achieve the American dream of homeownership?

Well, Mr. Barr, thank you for the question. It's great to see you again and thanks for your leadership on that bill in particular. It's a great idea. I would argue the most important idea of the package that the committee's looking at. And I say that because community banks are so much better credit managers of these kinds of loans than our Fannie Mae and Freddie Mac. And why? Because they live in the local community where they know the asset, they know the borrower, they know the history of the asset. I think about Mr. Huizenga's story about his small apartment building in Michigan, right, where the local bank that knew him well was not allowed to invest in that loan and instead it got shipped off to some bank someplace else that wouldn't know it as well. So, first of all, an enormous amount of deployable capital sits in banks below $10 billion, which is what you're focusing on in this Main Street Act.

Yeah. And nothing wrong with non-bank mortgage originators, but more competition the better. Competition in credit markets lowers costs, obviously. And don't forget the fact that most of, up to 60 percent of all of the one-to-four family residential construction and land development loans are community bank held. And so another reason to promote regulatory tailoring for these community banks. Mr. O'Leary, want to pick up where you left off on affordable energy and China and the investment that they are making in reliable, affordable sources of energy, coal being primary. You know, because of the war on coal over the last 16 years under the Obama and Biden administrations, the United States has prematurely retired 290 coal-fired power plants precisely at the time when AI data center energy demand is skyrocketing. We've taken offline over 120 gigawatts of power over the last decade or so. Coal's share of total electricity generation in the United States has plummeted from 44 percent of total U.S. electricity in 2009 to only 15 percent of 2024. And it's no surprise that there has been a dramatic spike in electricity rates. In Kentucky alone, utility rates have increased 59 percent over the past 16 years. So, what is the answer? You said in China they say, "Build it in 18 months or you'll disappear." How do we bring more coal generation back online to win the race for AI, which Jensen Huang says we're only nanoseconds ahead of China?

Path to permit. I'm a real estate developer. I also develop data centers. We need a path to permit in less than seven months. So, there's plenty of stranded nat gas all over the country. So, my job now is to go from state to state to find 2,000 acres with water, with stranded nat gas at sub-6 cents a kilowatt hour, and then I sit with leadership and say, "Can you get me a permit to begin construction in seven months?" Because I have to go, just to start the power, the 1.4 gig to make a one-gig facility, of which the demand in U.S. is 45 gigs only five under construction right now. I'm one of maybe 10 teams that can do this. If we don't have a permit in seven months, we can't go to the debt markets. We need $2 billion to start.

Well, I've talked to Secretary Lutnick about how we can encourage more construction and power. And I'd love to talk about that. Final question to Mr. Moore. In his testimony, Professor Hamilton said we need an economic paradigm that rejects private interests under the banner of modern supply-side economics. Can you speak to how unleashing the supply side of the economy through lower taxes, less regulation, more energy production, more supply of capital lowers prices?

He can, but he'll have to do that in writing.

Supply, supply, supply. That's how you lower prices. It's not that hard. Gentleman's time has expired. Chair recognizes the gentleman from Missouri, Mr. Cleaver, who's the ranking member of our Housing and Insurance Subcommittee.

Thank you, Mr. Chairman. Mr. O'Leary, you and Mr. Moore both, I think, suggested that state and local barriers to affordable housing was due to a lack of building code inspectors and a variety of zoning matters. Are you suggesting that we should not have zoning in major cities?

No. Was that for me? Sorry, no.

Either one of you. Both.

No. It's a very simple equation, actually. If you're agnostic to politics, you go to the path of least resistance with capital. So, if you want to invest a billion dollars in housing, you find a place, as Mr. Moore suggested, like Houston, where the path of least resistance is obvious. That's why they're getting the houses, because I can go put capital to work there, I can do it quickly, path to permit is a lot sooner. I'm not suggesting it's the Wild West, no permitting, but it's if you go and compare that to Los Angeles, it's not investable. You cannot invest in Los Angeles. And I've said this countless times. I'm not against the people of Los Angeles, but you can't raise capital there because of this issue. So, path to permit in housing will increase supply, reduce costs. And I talked about input costs on softwood lumber and things like that, but it's really a supply chain problem. Just give more land, reduce the friction on permits, and watch the magic happen. Watch the money flow there. 52 cents of every dollar invested on Earth comes to the United States. It wants to invest here. It's still 52 cents in every dollar. The number one economy on Earth. You can't get a permit anywhere, basically.

Yeah. There is this subtle suggestion in here that due to lack of building code inspectors, you know, things were not done. As a former mayor in Kansas City, that's fine and easy for somebody who's not in that mayor's office because that's an unfunded mandate if the government said, "You do this zoning and you do that," and it disrupts the municipal budgets. But I want just a quick question before I go to my next question, and that is: are all of you in support of consumer protection?

I am.

Yes.

I mean, as a former regulator, I'll just say of course I'm in favor of consumer protection. There's an issue of how many agencies should have the overlapping responsibility for consumer protection and what do you mean by consumer protection?

Well, I'm kind of asking the questions, but the issue is how you look at it because I don't understand all of the hostility toward a consumer protection agency. I mean, it's just mind-boggling that...

I don't think you're getting any friction there. The point is how fast can you do that work? I think every consumer should be protected, but not if it takes two years to determine whether protected or not. That just becomes a huge friction point and the market can't work. We've put so much regulation at so many levels, whether it's at the city level, the state level, the federal level, that the market stopped working.

Yeah, but those human beings' lives stop working when they're taken advantage of. You know, it might take two years to get it straight. I mean, I don't, it's just hard for me to figure out. But I want to go over to some serious problems we're having that I hope we can't solve this morning, but we can probably solve tomorrow if you stop by. And that is, if the United States of America is going to become what I think the founders wanted and what many of us want, why do we keep, I mean, even in testimony, we put blue city and red city and green city and yellow city and whatever. I mean, why is that going on? I mean, why would you have to do that?

I'd like to ask you to respond in writing to the gentleman's question. Time expires. Chair recognizes the gentleman from Texas, Mr. Williams, who is the chairman of our House Small Business Committee. Mr. Williams, you're recognized for five minutes.

Thank you, Mr. Chairman. Thank all of you for being here today. Good to see so many of our friends. The rising cost of housing is hurting American families. We've talked about that all day today and Main Street businesses too. When housing becomes too expensive, fewer homes get built. That slowdown in construction limits community growth, which in turn puts pressure on local small businesses. Small businesses are the backbone of their communities. We've talked about that. Almost 99 percent of them are small. But when neighborhoods stagnate, entrepreneurs lose opportunities to grow and expand. That's a problem. And from small builders and carpenters to plumbers and welders, housing affordability and small businesses are closely connected. And when one struggles, the other often struggles as well. So, Mr. Brooks, first, can you expand on how the rise in housing costs affects small businesses, Main Street America?

Well, as several witnesses have already said, Congressman, the foundation of most households' wealth is their equity in their house. And so the ability of a household to spend, the ability of a household to sell the house and move for a better labor opportunity, it's all really tied up in the robustness of the housing market. And as I said, the robustness of the housing market has two aspects to it. There is the price of the house and your ability to sell it. So, we saw in the financial crisis that labor mobility went to zero because no one had equity and they couldn't sell their houses. And the second piece is the price of credit, which is how much does it cost me every month to pay my mortgage and stay in that house. Both of those things are inflated right now, which contravenes what you learned in economics class in high school. Usually, if the cost of money is high, then the cost of the underlying asset is low. Right now, we have a strange stagflation in the housing market. Something's got to be done about it. This is the Committee on Financial Services, and so you have jurisdiction to oversee the credit allocation in this country. And I would argue that the regulation of our banking sector, the reduction in competition in lending to Main Street, right, where people can use home equity to fund businesses or sell houses to move for better jobs, that system's broken. It used to work well. It stopped working after the crisis.

You're exactly right. One thing about full disclosure, I'm a car dealer. And so when we start talking about access to capital, you're talking to me. And it's essential to building a successful small business. In addition, one of the most common challenges they raise, small businesses, are the one-size-fits-all regulatory burdens that limit how small businesses can use their capital. And they must decide between regulatory compliance or expanding their business. And it's like banks are hiring compliance officers, not loan officers. That affects Main Street America also. So, to give small business a real chance to succeed, we need to reduce unnecessary red tape. We've talked about that and remove the barriers that prevent entrepreneurs from securing the capital they need and, frankly, competing so the consumer is the beneficiary. So, Mr. O'Leary, you invest in small businesses that we certainly know. You do a great job from a wide variety of industries. But what are you seeing as some of the biggest hurdles, but the biggest regulatory hurdles to success of Main Street?

Across all 11 sectors, it's financing receivables for small businesses. It's become a huge problem. When interest rates were really, really low, the hard money, as it's called, was available at 15 to 17 percent. That's a lot, but it was used quite a bit. And my companies used it. We're way over that now. I've seen 27 percent offers for financing receivables because they can't go to a regional bank and get any financing. These are good companies that are actually recurring invoices to Walmart, to Target. I mentioned those two companies and many others. And in Amazon as well, is 40 percent of volume now for consumer goods. This is a, if we just solved this, if we made credit available at sub-10 percent for these companies, just like the big guys have, they're right now paying seven, seven and a half. We did that for small business, you would see an explosion of growth in America. Millions of businesses. Millions. We're talking millions and millions of businesses that do not get 7 percent credit for their receivables. This is stuff they sold and it's sold through. It's proven. It's a good asset. Can't finance it. This is a big problem. And I'm, this act helps a bit with the red tape on it, but they're still not getting anywhere near what the big guys get. They're not getting 7 percent.

They'd make more profit and pay more taxes if the interest rate was lower.

And more jobs. There you go. Way more jobs.

So, Mr. Brooks, let me shorten my question as we end it down here. What are the consequences for borrowers in local economies when community banks, which bank people like me, are forced to pull back in lending due to regulatory capital? And we just talked about that pressures.

Well, Congressman, one of the things that happens is foregone consumption because most people don't have access to Goldman Sachs. So, if First National Bank of my hometown in Colorado isn't going to make the loan, the loan's not going to get made, is the bottom line. Most capital formation happens locally, and if community banks are not unleashed to supply that demand, you're mostly out of luck.

Well, we talked about inventory and flooring inventory's getting harder and harder and we have less inventory, you have less opportunity to sell. ...sell, it trickles down. I want to thank all of you for being here today and I yield my time back.

Gentleman yields back. Chair recognizes the gentleman from Illinois, Dr. Foster, who is the ranking member on our subcommittee on financial institutions.

So Mr. O'Leary, here's the pitch. Imagine it is 1975. Two brothers, a 19-year-old and his 17-year-old little brother, a couple of their friends have the bright idea to start a new business. All right, they want to use the newly invented microprocessor to control theater stage lighting. Never been done before. But they have a problem. To build their prototype, they need $500 from their parents. So my question is, do you give them the $500 and if so, what do you predict for the future of their business?

You know, that's I love that question because my son just pitched me for a lot more than that on his deal.

Well, this was $500 in 1975, which was real money back then.

That's a lot of money. You know, I think it's I would have done that. I would have lent it because the outcome is unknown. But there is a wonderful thing that happens when a young person takes on the responsibility of another person's money. It creates a fantastic platform by which they understand they serve someone in perpetuity.

Yeah. Well, so I was that older brother and...

And what happened?

What happened is the company, it's 51 years ago now. And that company, it's about $450 million a year, 1,600 employees.

Well, I rest my case, Your Honor.

Manufactures in the Midwest, all right. And as of the beginning of last year, it has just completed the ESOP transition. So that company that we started with 500 bucks 51 years ago is now 100 percent owned by the 1,600 employees who built the company.

Well, you deserve the American Dream Award for that.

Well, it's I am I guess proud of it. And I, you know, I had my partners buy me out when I entered Congress because I did not want to be casting votes that affected my net worth, which may sound sort of quaint these days, but anyway, that's what I did. Anyway, the and you know, both sides here have emphasized the role of local community banks in housing and in business growth. Now during the government shutdown last October, the Federal Reserve had two really excellent conferences, one on community banking, the other on the future of payments. And since we had decided to cancel hearings, I attended both full-day conferences. And what we heard uniformly from all the community bankers who showed up was that their number one concern was what they viewed as the mortal threat from interest-bearing stablecoins, either by directly paying interest or indirectly through, you know, various payments from the crypto exchanges that was allowed by the Genius Act. You know, they had a fear that, you know, interest-bearing stablecoins would just drain the deposits from small community banks and take away one of the only sources of capital that small communities have, rural communities or... And so I was wondering with this whole panel here, where would we land on that? I mean, we have a decision to make. Should we side with the community banks on this or should we side with the...

I'd love to opine on that for a short period.

Sure.

The opportunity is for the community banks and all money center banks included to allow small businesses to open a stablecoin account beside their fiat currency account. There is absolutely no reason they can't do that. If I were a small community bank, I would try and keep competition at bay, but you can't. We've passed the law. It's legal tender. A stablecoin backed by 92 days less duration of a Treasury bill is now a legal tender for anybody that wants it. The banks are holding back by not allowing accounts to show up and every one of my companies is using these now to settle payments or take in payments. And it's a huge inconvenience. You're forcing them to open accounts at Robinhood and Coinbase when they'd just rather work with their regional bank if they could. I'm not against Robinhood or Coinbase. They're innovators. But small business doing $5 million in sales that can avoid 2.5 percent on a credit card payment by using a stablecoin, let them do it.

Yeah. Well, I think the competition there, you know, frankly, it's India. You know, if you want if you're in India and you want to give a pauper three rupees, you both get out your cell phones, authenticate to your bank accounts, transfer three rupees, zero fees. And it has nothing to do with, you know, blockchain or anything else. Now I guess we've also hit on this issue of financing receivables. And you know, there's a big the current issue there is, you know, the a lot of the, you know, first brand fraud and similar things with double pledging of collateral is a huge problem. Those of you who follow Money Stuff, this very amusing blog, has written a lot about that. Now the DTCC is doing a very interesting prototype that uses blockchain and tokenization to prevent double pledging of receivables and other assets. I was wondering if you can, you know, would that actually be a significant positive use of blockchain here?

Yeah, I think people should stop thinking about blockchain as crypto. It's really just software. It's contract management. That's what it is. And I think it's been misnamed. In fact, if you take out the speculation of Bitcoin and all the other coins and forget about that for a second, blockchain technology is good...

Gentleman's time has expired. Mr. O'Leary, if you'd finish that thought in writing to Dr. Foster. The gentleman from Georgia, the vice chairman of our financial institutions subcommittee, Mr. Loudermilk, you're recognized for five minutes.

Well, thank you, Mr. Chairman, and thank all of you for being here today. I go back to when I first ran for Congress in 2014. As a small business owner, I wanted to engage with businesses of all sizes in my district. So I spent many, many hours meeting with various businesses. And I asked them what is the key, what is it that I can do in Congress to help you expand, help for your business to be profitable, which we all know if a business is profitable, then the community's profitable. And I can't recall anyone saying anything different is that the common answer was the greatest cost to our business is government regulation. To a T. I even asked a group of executives, I said, which would be more important to you, for us to lower taxes or cut regulation? And you know what they all said? Cut regulation. Taxes are important, but government regulation is the greatest drain on our profitability. With housing in mind, I started doing some research and I came across a study, and this was in 2014, that in some markets over 50 percent of the cost of a new home is related to government regulation. And I started thinking about that. You could cut the cost of a new home significantly just by reducing the regulation. And as we look further, there's a lot of regulation that is not even applicable to the business that is having to live by that regulation. And so if you want to look at the high cost, we need to look at the regulation side. And I think that's what really we're focused on this side of the dais here is how can we do that. Mr. Brooks, you mentioned in your testimony that most Americans know that everything got more expensive over the past five years as the country experienced this incredible inflation, the highest since the 1970s. But a lot of people don't know that housing inflation was dramatically worse. Can you talk about why we saw that spike in housing inflation?

Yeah. So Mr. Loudermilk, one of the worst parts of that problem is the 5 million unit housing deficit is not new. The 5 million unit housing deficit goes back basically to the immediate post-financial crisis era and nobody's built a house since is almost what it feels like, okay. And that was the point where two things happened at the same time. So one is we had bad credit management, which meant many people had negative equity in their houses and couldn't move for work and couldn't sell their houses. And the other is we overcorrected on the credit side. And I would argue that a corrective was needed. We needed something like Dodd-Frank. But with 15 years of experience of that kind of regulatory environment, banks can't do business. We could talk about it in the housing context as we've already done, but Mr. O'Leary's mentioned factoring and inventory finance for a while. The federal bank regulators have more or less prohibited factoring as a business line for banks. Venture debt doesn't exist in the United States after Silicon Valley Bank failed. These are all overcorrections where there's a strong demand for a product and when you drive the regulated institutions out, what you're left with is the hard money lenders and the scary guys nobody wants to talk about. That's got to be fixed.

Well, we're addicted to this institution is sort of like when somebody has a headache, they go to the doctor, they give them an aspirin and they never look to the real root of the problem. And our aspirin is money. Just throw money at something and hope it goes away, but it inevitably gets worse. Would additional government spending instead of meaningful regulation relief and market-driven reforms make housing availability and affordability, would those problems get worse or better?

Let me just say the more regulation that has come into the housing market, the more it's like you squeeze a balloon. So you think you're solving one problem and it pops up someplace else. As government gets involved in credit allocation, what winds up happening is market discipline goes away. So think about what Fannie Mae and Freddie Mac were doing in the '90s. They were inflating markets in areas and creating loans for people who couldn't afford the loans, leading to a very predictable foreclosure crisis. That's what happens when government rather than private sector actors start managing credit is they allocate the credit to their friends. This side has their friends, that side has their friends, but squeezing the balloon is never a good idea. The good idea is let the shareholders bear the risk. Let the private sector get back involved here. You know, private sector banks can manage credit just as well and fail if they fail just as well as a car dealership can, just as well as anything else can. But when government's too involved, bad things happen.

Real quickly, I'm running out of time. How I've got a bill called the TAILOR Act, which would cause government agencies to tailor their regulations based on the risk of the business, the size of the business, the scope of the business instead of just blanket regulation. How important is that?

Critical. Compliance for compliance's sake is a waste of time. You have compliance because there's a risk. So say what it is and control that risk.

And with that, Mr. Chairman, I'm out.

Gentleman yields back. Chair recognizes the gentlewoman from Ohio, Ms. Beatty, who is our ranking member on our national security subcommittee.

Thank you, Mr. Chairman, and thank you, Ranking Member Waters. And to all our witnesses today, thank you for being here. On the record and off the record, let me say I'm a big fan of Shark Tank. And Mr. Moore, I'm trying to decide if you're that on TV or here, but thank you for your remarks on tariffs that we're doing. And to my good friend Dr. Darrick Hamilton, good to see you again. You've been here and testified before us and also at many academic forums on the economy and on housing. And some things have not changed. But let me start with this because I've been a long-time advocate for community development financial institutions or our CDFIs. And our ranking member opened up the dialogue early talking about the importance and value of CDFIs. And so in this committee, I like the theme when we're talking about priced out of the American dream. And it reminds me of the American dream for most folks is owning a home. Do you remember your first home? To the witnesses, yes or no?

Absolutely.

Yeah, I do. I do.

Yes, I'm still in that first home.

Okay, there you go. There you go. So right now when I think of that American dream, I think about homeownership. I think about whatever your financial goal was to reach it. But then I think about our economic challenges. I think about Trump's tariffs and what it is doing to those individuals and the economy and small and large businesses. And when I think of dream and we're here in the middle of February and it's Black History Month, Mr. Chairman, I'd like to enter into the record this article from Darrick Hamilton in 2021 when he talked about the difference between haves and have-nots. And he said these words quoting from the lessons of Dr. Martin Luther King: "Now is always the time to build on the lessons of Dr. King and shift our prevailing paradigm toward a more inclusive and self-prosperous future with the strategic direction of our public resources toward people and a sustainable environment in both an industrial and economic sense. In that end, the optimistic message is in the power that lies within us as we dream the American dream and our economy."

Without objection, that'll be included in the record.

Thank you. Here we are some five years later. I could have also Dr. Hamilton gone back and quoted you 15 or 20 years ago. I could have quoted when you were at where I left, the Ohio State, to come here and you ran our Kirwan Institute, doing some of the most prolific research that I have ever read on economic development, our country, our people, and our economy. So last week, I asked Secretary Becerra for an explanation to when the appropriations for fiscal year 2025 funds would be dispersed to the CDFIs. I couldn't get a straight answer. No, I did get an answer. He said he chose not to answer it because he didn't have the answer in my opinion. Aside from him putting the blame on the Office of the Management and Budget for failing to appropriate the funds, I know that for CDFIs predictability in funding cycles is essential to plan long-term community investments and maintain the momentum in our neighborhoods, the neighborhoods that they serve. Can you discuss the risk associated with these extended funding delays on what is going to happen in our communities with CDFIs with the Treasury dragging their feet?

Markets are local, markets are relational. So not funding those entities is highly problematic and will be detrimental to our economy. And if I may address a point that was raised previously about whether I'm anti-supply, I'm not anti-supply. I believe in the American people. I believe that people go beyond just being labor inputs and beyond just being consumption agents, that they are the innovators. That when CDFIs are able to invest in people, when government is able to invest in people, not only is it beneficial for them, they produce, they come up with new...

Gentleman's time has expired.

Thank you. I yield back.

Thank you. Recognizing the chair recognizes another distinguished member from Ohio, Mr. Davidson, you're recognized. Mr. Davidson's the chair of our national security subcommittee.

Thank you, Chair. Thanks to our witnesses. What a great panel, really have enjoyed the discussion. And you know, when I go back, frankly Mr. Brooks, Mr. O'Leary, Mr. Moore, you guys in particular, as we were watching this inflation crisis unfold, we called it. This isn't a results of some phantom cause, like how could we possibly know what would cause inflation? We could see this train wreck coming because we saw massive spending, cash pouring into our economy. And as the fiscal spending was going, Congress just kept cutting bigger and bigger checks. Meanwhile, you had executive authority around the country, frankly around the world, artificially limiting supply. They were closing our entire economy. So how did you not have too many dollars chasing too few goods? Under the Biden administration, they came up with creative names like the Inflation Reduction Act, you know, to spend this money. I mean, when Lee Zeldin took over at the EPA, he cited the Biden administration's own words that they were pushing gold bars off the Titanic, shoving this cash out into the economy to do nothing productive. And we look at auto industry companies writing off tens of billions of dollars in losses because there was no consumer demand for this. And this is what happens with central planning. And in essence, the central planning that we've sort of all embraced is the Federal Reserve. They arbitrarily set interest rates and when they arbitrarily set them too low, as was definitely happening during this period of time, they cover for it by growing their balance sheet. In fact, they grew their balance sheet to over $9 trillion. So should the Federal Reserve continue to do this? You know, Mr. Moore, you've highlighted this. Are the results predictable or is it just how could we explain this? And Mr. Brooks, as you've highlighted, the house is maybe the most common asset people have. So once you've inflated something, of course housing prices are inflated, but so are other asset prices. Mr. Moore, could you talk about these implications?

Well, you did a nice summary, Congressman, of what's happened over the last five years. And you know, we spent $4 to $5 trillion after COVID. And by the way, it was mostly, you know, the Build Back Better bill, the Inflation Control Act, the infrastructure, the quote infrastructure bill. And that's look, you said it very well. Inflation is too many dollars chasing too few goods. It's not complicated, right? It's too many dollars chasing too few goods. What did we do? Where did the money come from to fund this? And by the way, Trump on his way out in his first term passed a trillion-dollar spending bill we didn't need. And so it was all printed. We printed the money. And so by the way, there were 30 economists in the New York Times, including Nobel Prize winners, said don't worry, all this spending won't cause inflation. I mean, those economists probably should send their PhDs back and say we don't know what we're talking about. So we had the highest inflation in 30 years. And the point I was trying to make to the committee is we're paying a high price for that even today. It's the reason, Mr. Chairman, people are angry because prices of steak and brown beef and eggs and everything that they buy is more expensive. And it takes a long time to drain that out of the system. And so hopefully we've learned the lesson that there's no such thing as a free lunch, that these that these expenditures came at a cost of much everybody paying higher prices and much lower growth. And the good news is, you know, we're at now at a 4 to 5 percent growth path within one year of this new administration. That's a pretty remarkable achievement.

Sort of like Narcan for a fatal overdose of government that was administered. We're trying to revive it with, you know, the big beautiful bill, the Working Families Tax Cut Act and many pro-growth policies. And when I think about pro-growth policies, one of the big ones, Mr. O'Leary, you highlighted as a guy who grew manufacturing companies before between the Army and coming to Congress, capital is is really the lifeblood. And when you look at being able to get get access to that, one of the challenges has been still the Federal Reserve. They're paying banks not to deploy capital. Interest on reserves is one thing, they're paying interest on excess reserves. So the banks are hiding their cash at the Fed, not putting it at risk in the market. We know the banks aren't meeting the market demand because you have a massive growth of non-bank lenders. Again, Mr. Moore, could you highlight, you know, kind of the challenge on interest on excess reserves? I think you've cited that that's costing like $200 billion a year that could be in our economy.

Yeah. I but what I like to solve this problem is always innovation and competition. I mean, it's to me, if you just let the American economy do its thing as it's done for 200 years, it remains number one on earth through all kinds of change, but it's all about innovation competition. So anything in the banking system particularly that that stifles innovation competition is bad. And we have some of that happening.

Unfortunately, my time's expired and I'll send a few questions for the record. I yield back.

I thank the gentleman. Now recognize the gentleman from California, the ranking member of our monetary policy task force, Mr. Vargas, you're recognized for five minutes.

Thank you very much, Mr. Chairman, and I want to thank the ranking member and of course the witnesses here today. I think that the hearing today has been excellent and I appreciate it very much. We did just get lectured on fiscal responsibility. I would just like to remind my good friends on the other side they just passed the big ugly bill that added $5 trillion to the deficit with no benefit to it. But I think that Mr. Brooks, you spoke the most truth today when you said that side has their friends and this side has our friends. I think that's I think that's very true and I think you said the quiet part out loud and that is they love the wealthy and the big corporations and we love the working class and the poor. That's that is the truth, so I'm glad you mentioned that. By the way, Mr. O'Leary, I I don't watch the show much because I don't like TV, but I always like watching you because I think you're very clever, you know, when you banter back and forth with your friends on the show. And today when you were asked the question about coal, coal, coal, isn't coal so great, we need coal? You said yes, wherever there's gas. You know, that's where I want to build, wherever there's gas and land. Didn't answer the coal question. And I thought that was great and he felt like he got his answer and walked away, but you didn't answer the coal question.

Yeah, I'll answer it if you want. I don't think I can get a permit for coal, so I'm not stupid. And I'm not going to waste my time trying until you tell me I can.

So I'm a very simple person. How fast can I get a permit? Because what I can do is raise capital from all around the world. And if you go and try and raise $2 billion and you tell them you're going to use coal right now, the cost of capital go up 300 basis points. I was going to get to that because I think that's one of the things that you said that's very, very true. It is actually how quickly you can get a permit. That is with housing, with anybody, anything else. You need certainty to be able to finance it. I was on the San Diego City Council for eight years, I chaired the land use and housing committee for some time on that committee. Unless you could have a developer get certainty that they could develop, it was very hard to carry that property. So they needed certainty. People that put pushed back the most actually were the people that lived in the community where the development was coming near to or in because of the issue of they didn't want crowding, they wanted to protect their investment. They wanted density somewhere else, development somewhere else, not in their neighborhood. And that's a problem. I mean, that really is a problem, the zoning issue. How quickly can you get the opportunity to build? You need to have that opportunity so you can finance that project in the first place.

I don't even break the ground until the community's behind me. I don't even bother trying. You can't win that way.

Exactly. But that's why I'm saying, unless you have the ability to do that with zoning where you can do it by right and you can get to it quickly, you can't finance it. The bank won't finance it. You need that ability, but you have to convince your community that development is necessary so your kids can live somewhere. And that in California means density. And it's hard to convince people of that. I know how to do that. Yeah, no, and I think some people do well. Most people don't, and that's why I think you need to have it by right and not by the ability of someone to charm them, but instead by zoning that does this. So you can in fact and in California, thank God they're trying to change this because there's a number of things. For example, smaller lot sizes. They don't need these gigantic lot sizes too. By the interestingly, the turn of the last century in 1900, a single-family detached home was about 700 to 1,000 square feet. Today, it's 2,400 and bigger. You don't need these large homes. You can have smaller homes. You can do this and have a very nice community. And and so anyway, I was going to to add those things. The other things I'd like to say is this, the interest rate is a problem, but I bought my house in 1979, I paid 7.2 percent interest on the mortgage. I still live in the home, by the way. And my parents bought their home in 1972, they paid 7 percent. Today the interest rate for a single-family mortgage is about 6.3 percent, 6.4. It's actually lower than when I bought my home. The problem is this, though. I bought my house for $176,000. If you put it in an inflation calculator to try to figure out what is the cumulative interest on on interest as well as inflation today, that should be about $390,000. It's not, it's $2 million. That's the problem. The actual cost of the home has driven risen so dramatically that you can't finance it anymore because it's too damn expensive. That's why you have to have smaller lots, that's why you have to have smaller homes, that's why you have to have the ability to get those permits with some certainty so you can finance the project in the first place. That's why I think this was a very helpful meeting and because I think you guys did speak of those things. And and again, I believe very much that there's been discrimination, no doubt about that. And with that, my my time's over and I yield back. Thank you.

Gentleman's time has expired. The chair right now recognizes the gentleman from Tennessee, Mr. Rose. Mr. Rose is recognized for five minutes.

Thank you, Chairman Huizenga, and I want to thank Chairman Hill and Ranking Member Waters for holding this important hearing. And thank you to all of our witnesses for taking time from your schedules to be with us. Mr. O'Leary, I appreciate your testimony emphasizing the need of streamlining permitting and freeing up federal land for housing. I agree wholeheartedly. However, in many communities, particularly our densest urban areas, there simply isn't undeveloped land left to be built on. In these places, the solution must be building up, not out. Yet restrictive zoning laws stand in the way. For example, here in Washington, D.C., perhaps the most glaring example, the Height of Buildings Act of 1910 caps building heights based on street width with an absolute maximum of 130 feet. This arbitrary limit created over a century ago artificially constrains housing supply in one of America's most expensive housing markets where the median rent exceeds 2,200 per month. Do you believe that relaxing or eliminating Washington, D.C.'s maximum height restrictions would allow the private sector to increase housing supply and reduce costs for working families?

There's only one answer, it's yes. We would build up in two seconds if we could do that. I mean, you need a combination of all of this. You know, the thing that I wanted to point out to everybody is there's a competition between states and there's a competition between nations. So right now, if you're given $2 billion to deploy, you have to find a state where you can get that money to work. And so you go for the path of least resistance and the places that are obviously getting that capital now are places like Tennessee, Texas, Florida, North, South Dakota because permitting has been relaxed there by the leadership at either the governor's office or the mayor or the senator or whatever. Imagine my challenge. I have to deploy capital. I have to find a place to do it. And the harder it gets, the less I want to spend my time fighting that fight. I'm just a guy trying to put money to work. And so you've if you told me, if I was the first to know that you'd lift those height restrictions, how about $2 billion right now? Like in two seconds. The demand for housing's crazy in D.C. I mean, that's a good idea. Why don't you do that? That's a fantastic idea. 100 percent endorse that. You would get a ton of capital.

Thank you. I appreciate that. Mr. Moore, in your written testimony, you warn that federal policies reducing down payment requirements to 2 to 3 percent range, in some cases effectively to zero, were a major driver of the 2008 housing and financial collapse with default losses concentrated in those low down payment loans. At a time when it is very tempting for policymakers to respond to the housing affordability crisis by expanding low or no down payment programs, can you elaborate on why you believe that approach is so dangerous and how we should weigh the short-term appeal of expanding access against the long-term systemic risks that you describe? There's nobody that's more in favor of increasing homeownership and so I that's one of the reasons I wanted to testify here because I think it's a high national priority. It is the American dream. The mistake we made before 2008 was that we kept subsidizing so much of the of the...

...of the down payments that thanks to programs like FHA and Fannie Mae, you had people paying 3 percent or less down payment. And in some cases, by the way, the down payments were zero. You could finance your closing costs. And so essentially what that meant is the person who was moving in had no skin in the game, right? And so unfortunately, the lesson we learned, we should have learned from 2008, is that if you looked at the portfolio of loans that were defaulted on, the single biggest determinant was how big the how much equity the person had in the home. In other words, if somebody has equity in their house, they're not going to they're not going to default on the loan because they've they've got skin in the game. So all I'm saying, my advice to you as members of Congress is there's all these ideas, oh, let's keep lowering down payments so people can afford to move in a home, but they then they can't afford to make the payments and then everybody's worse off. So please avoid that because the losses were excruciating. It took five years for the U.S. economy to recover from that mortgage meltdown that we had in 2008.

Thank you. I agree very much. Mr. Brooks, we don't have many seconds left here, but what can we do, what do you think Congress, policymakers here can do to reverse the damage done by the Biden era inflation? Is there something we can do from a policy perspective?

Well, you can start by fixing the the regulatory overhang. So somebody said earlier today you've got two problems, inflation and taxes on one hand and regulation on the other hand. Growth requires deregulation. We have to grow our way out of this.

My time is expired. I yield back.

Gentleman's time has expired. The chair now recognizes the gentleman from New Jersey, Mr. Gottheimer, for five minutes.

Thank you, Mr. Chairman. Thank you, ranking member. We know that professional single-family rentals and build-to-rent providers have built more than 100,000 new homes in the past decade, adding to the supply. And we know that we're about four and a half million units short in the country, which of course leads to higher prices in most of our communities and less mobility. People because of mortgage rates are stuck in their home that they're currently in even if they if they want to move. So when you we keep adding, I know the build-to-rents and the SFRs are adding supply and building to rent and giving people options to actually go somewhere. So, you know, my concern here and I just want to see if I'm getting this wrong, my concern is if this disappeared, if suddenly we said you you can't do build-to-rent, what would happen to our what do you think would happen to our housing supply and you know, it seems to me this would be it's a basic supply and demand thing, but I could be missing something here. Mr. Wonderful, I don't know if you want to start.

You're asking me what would happen to the housing supply if what?

If suddenly we told the single-family rentals and the build-to-rent folks you, you know, we prevented that from from going forward, from building to rent.

We would it seems like we'd lose supply, right? Well, my whole you know, New Jersey's an interesting place because you've got a housing issue there too.

Huge housing issue.

Yeah. And and I would love to put money to work there. But you've got a lot of permitting issues as well. You also have rent control issues there. You know, it's a very...

In certain in some of the urban areas.

Yeah, but I mean, think about it this way. And I think you've raised a really good issue. I'm just a guy with a lot of money to put to work. And so my investors say, where's the next project? And I say New Jersey, they go, nah, I don't think so. What do you got in...

Mostly because of permitting and the time to build?

Yeah, because the cost remember, I'm 50 percent debt. And debt needs uptake certainty. Right. And and I also need at least as as Brian brought up earlier, if the if the CAPEX on the building's 3 percent a year and you've got a cap on rent control, he's right. There comes a time when the building's worthless because you can't fix the plumbing anymore. This is a huge problem. And you have it in your state and you have massive demand. So if you fix that, if you fix that, you would have capital like that because it's a very desired location for sovereign wealth. 100 percent New Jersey if you could fix that problem.

Of course, you don't want to be in socialist New York, you want to be in capitalist Jersey.

No, no, I'm happy to build there.

God's country.

Listen, I am agnostic. I work with leadership that helps me get a permit. That's that easy.

So so on the point of ensuring, in my opinion, which I think is really important, that we have supply and that we do everything we can to get supply up, we we know that the cost renting a single-family home is 38 percent cheaper than buying one, right? So for a lot of people, you know, a lot of my constituents they tell me this is their only option, right? They they can only rent. And a lot of them of course want to be in a lot of these neighborhoods, you know, in Jersey we've got the best schools. So people want to be in a lot of these neighborhoods and and single-family rentals give children and families access to those neighborhoods and at a lower price. We know that people who get a great education how important it is for long-term success. So for so it seems it strikes me, shouldn't families and I'll start with you, Mr. Moore, shouldn't families have the option to choose rentals to give their children access to better schools and better neighborhoods? It strikes me that that makes sense, no?

Mr. Moore? That's you. Yeah. So I'm sorry, does what make sense? Say that again.

To give people access give them the ability to get in rentals so they can have access. I know a lot of families in my district wouldn't be able to afford to buy a house because it's expensive. So their only option is to rent because they want their kids to go to these great schools. Does that am I getting that right?

Well, look, we need to do everything we can to increase the supply of homes so people and so that you can have lower-priced homes so people can afford to buy them. I mean, the great thing about home ownership is that people put roots in the community, right? And so we want policies that make these homes affordable and for so many reasons, including what what my fellow panelists have talked about, regulations and building codes that are outrageous, etc. We're making it we're pricing people out of the American home and there are ways that we can increase the supply. One other quick thing to think about, by the way, this is partly demographic. You know, I was born in I'm I was born in 1960. That was the peak year of births in the baby boom. And we're it's interesting we're having this conversation about, well, an inadequate supply of homes right now. Well, 10 or 15 years from now, we might not have that supply. We might have an oversupply of housing. Just something to think about.

It's a great point. Thanks. I yield back. Thank you.

Gentleman's time has expired. With that, the chair now recognizes the gentlelady from Michigan, Mrs. McClain, who is also the chair of our Republican House Conference. She is recognized for five minutes.

Thank you. And thank y'all for being here. Appreciate it. Mr. Brooks, I'd like to start with you if that's okay. Obviously, we've talked about it at nauseam, regulation, access to capital, etc., etc., is very important. But I want to talk about if we could some action items. Chairman Hill's Main Street Capital Access Act, right? I believe it will lower costs for local community banks and rural institutions by lowering compliance costs for banks certified as low-risk and healthy, right? We've gone from roughly 14,000 banks in the 1900s to 4,200 banks today. I'd like to hear your opinion on how much of that decline in the banking industry is due to overregulation versus normal market conditions? Because sometimes we have a we say we're capitalists, but yeah, I don't know if I really like the free market. So I'd like your opinion.

Well, I appreciate the question, Congresswoman. The you know, mergers and consolidation usually happen when you need to spread your cost across a larger asset base, right? And so if compliance and other non-productive activities, and when I say non-productive, I mean non-revenue producing activities, become a major burden, you have to put them inside of a larger institution so that you have the revenue base to support the compliance. So there's no question that's one of the factors that's led to the shrinkage in in banking. The other thing as a side point that's led to the shrinkage in the number of banks, of course, is that at some point we stopped chartering new banks. We we went about 15 years post-financial crisis where we chartered one bank or zero banks a year at the federal level. Previously the number was in the double digits every single year. Compliance is a huge burden. It really is. And the point of the Main Street Act, and one of the reasons I applaud it so much, is because small banks don't have the kind of complex operations and they typically don't support the kind of systemic you know, risks that JPMorgan does. And so holding them to the same set of stress testing environments, which are obviously different for small banks, but those kinds of things for small banks really don't make sense.

Appreciate that. Second is you've said, and I thought this was very interesting, the Dodd-Frank made compliance so big and so expensive, excuse me, that it's too small for banks to succeed. I thought that was a really interesting quote. Can you elaborate on that?

Well, I mean, what what Dodd-Frank...

I'm sorry, we have already heard, oh my gosh, it's too big to fail, but too small to succeed I think is...

Yeah, it's 100 percent true. So what Dodd-Frank did is and and I think some of this was unintentional and some of it was just an overcorrection in a crisis, right? But now we have history so we know what was good and what was bad about it. Dodd-Frank almost singled out housing finance for negative treatment compared to almost everything else. And the reason we did that is because of this belief somehow that the financial crisis was exclusively a mortgage crisis. And the idea was, well, we have these long-dated mortgages and these short-dated deposits and that mismatch creates inherent risk. So you have to hold enormous capital against your mortgage book. And if you're a small bank, if you're a sub-$1 billion, let's say, community bank on Main Street USA, like in my hometown, you can't hold that kind of capital.

It's just not feasible.

Right. And so what happened? What happened is all of those loans got sold to Fannie Mae and Freddie Mac and banks no longer held any credit risk.

Appreciate it. Mr. O'Leary, if I could switch to you for a moment. Mark Carney has twice called for reducing the dollar's role as the world's reserve currency. Once in 2019 and then last month at Davos. What threat in your opinion does he pose or does that pose to the dollar's global status? Can you comment on that?

You're talking about Carney's speech at Davos?

Yes, sir.

Yeah. I actually believe as an optimist, you know, I'm a Canadian citizen, I'm Irish and my kids are Americans. I have a foot in both economies. There's a huge opportunity to to work out a Canadian U.S. situation to the benefit of both countries in a different way. The problem is you saw recently Modi got a deal done finally, just just days ago. That was done because Modi met with Trump privately. We need this now with Carney and Trump. We're in a bad place. And and I'm saying that this makes no sense and I think the only way to get it fixed because we know the President is a very transactional individual and and I endorse his policies. I don't get involved in politics, I never made money doing that, I'm a policy guy. What we need here is to deal with everything you just said is to have Carney or Trump find a place without anybody and no cameras, not a Zelenskyy type meeting, just the two of them go work it out. And there's so much opportunity because Canada has all the natural resources the largest economy on earth needs right here and they're right beside each other.

Gentlelady's time has expired.

Could be a win-win for both countries. Thank you.

Gentlelady's time has expired. Regrettably, because that's an important conversation, but I do need to keep this on time. With that, the chair recognizes the gentleman from Illinois, Mr. Casten, for five minutes.

I could just make the quick observation that we could actually cancel tariffs on Canada this week if the Republicans decided to pull the vote. Give some thought at the rules vote later today. I want to talk about the sort of the third rail that we all know but we don't like to talk about because we'll get in trouble if we talk about it. And I think, Mr. Moore, you had alluded to this in your opening remarks that housing is both an expense and we get political credit for bringing expenses down, and it's also an asset and we get political credit for making assets more valuable. And the math that we all know but we don't really like talking about is that 66 percent of Americans own their homes. Even greater percentage of voters, and for most of those Americans, that's the majority of their wealth. And so it would be politically suicidal for any of us to go out and aggressively lower the cost of prices unless we follow the advice of of Mr. Barr, which I share, supply, supply, supply, right? We don't, you know, that's the lever that is politically possible for us whatever whatever we think about that in some optimal space. And but I think it also creates this challenge where all of us agree that affordable housing is good policy, all of us understand the politics, and you got to watch politicians' feet because their lips will say things differently than where their feet go sometimes. And so I guess I want to start with you, Mr. Moore, because President Trump has directed large-scale purchases of mortgage bonds, proposed allowing people to put their 401(k) as a down payment in homes, among other proposals. Redfin's chief economist said that if enacted, those proposals would increase demand. That's going to raise the price, right?

I like that policy.

But but just in a vacuum, making those measures per Redfin will raise demand, which means we're going to raise the price of of people's homes, right? It's politically smart because for a lot of homeowners.

Well, look, this is a this is a conundrum, no question about it, because if you increase the demand for housing, then the price of housing will go up. So, you know, that's...

So I'm just so I'm just making the point that that is we're struggling here.

That is good for homeowners, it is bad for home buyers.

But if you ask me, do I support Trump's idea of allowing... I'm not I'm not asking that.

I do favor that. I think it would it would free up money for down payments.

Okay. So then separately, we've got on the supply side, Kansas City Fed researchers said that immigrants who joined the workforce ease labor shortages and help stabilize the labor market. BLS data said that we have American men have a labor force participation rate of 66 percent in 2024. American immigrant men had a labor force participation rate of 77 percent. According to a Harvard analysis, immigrants make up one in three workers nationally in the construction sector. In major metro areas like Dallas, Houston, Miami, they're 60 percent of construction workers. Mr. O'Leary, I'd shift to you. If that's the workforce in construction, do mass deportations of the workforce increase or decrease supply?

You have the same issue in farming, actually, as you do in construction. The solution to this might be a compromise where...

I'm not I'm not asking for opining on immigration policy.

Right.

I'm simply saying when 60 percent of the workforce is being deported, doesn't that hurt supply? I've been in business, you've been in business, if you fired my staff, I don't know how to deliver.

I don't I don't agree with you. I don't think it's 60 percent of the workforce. That sounds...

Well, that's 60 percent of the construction workers in metro areas, that's according to Harvard. You're not disagreeing with me, you're disagreeing with Harvard. It's also one in three workers in the construction sector. I think any any analysis from the Fed is that the sector is differentially affected. So so we're in this situation where you have actual policies from the White House that are increasing demand, actual policies that are reducing I mean, I'll give you another question, Mr. O'Leary. Raising the price of kitchen vanities, does that make homes cheaper or more expensive?

You're speaking of tariffs now?

Mhm. Well, you know, the tariff policy has been for decades reciprocal... No, no, no. I'm not talking about normal tariff policy. I'm talking about the bizarre tariffs. National Association of Home Builders said that the liberation day tariffs will raise the cost of a home by $10,000. Do you disagree?

Well, you know, I invest in that space. That's not our challenge. We're not that's an issue, but it's not something we're worried about as much.

Look, I'm I'm pushing back because you're smart people. The basics of supply and demand are not complicated. The only reason this is complicated is because we have gotten to a point where saying xenophobia is bad for the economy, tariffs are bad for the economy, this is not controversial. But to acknowledge that you have to admit that there are economically illiterate people in the White House. And the sooner we can do that, the sooner we can actually have a conversation about lowering the cost of housing instead of this nonsense that we're doing right now that is pissing off every single American, which by the way, is bad policy. I yield back.

Gentleman's time has expired. Gentleman yields back. With that, the chair now recognizes the gentleman from Wisconsin, Mr. Steil, who is the chair of the subcommittee on digital assets, financial technology, and AI. He is recognized for five minutes.

Thank you very much, Mr. Chairman. Thanks for holding today's hearing. We just heard from our colleague from Illinois, one in four construction workers I think was the stat in his opinion was here in the country illegally. That that may be true. I don't have the stat in front of me, but it doesn't doubt I have no doubt that Illinois has major problems considering its sanctuary city status and giving driver's licenses to illegals. So when we vote later this week on photo identification, I think that it shouldn't be lost on anybody why we need citizenship verification when you have states like Illinois giving illegal immigrants identification that would otherwise be able to be utilized to vote, although illegally. Let's dive in to the topic at hand. How do we make life more affordable for American citizens? We've seen all sorts of policies being implemented across the country as it relates to housing, some good, some bad. You had a Mr. O'Leary, you were on CNN recently talking about New York City's new mayor, housing policies. New York City's approach, right, put in place price controls, restrict on that side. Don't worry about supply because of course we're six million units undersupplied. So instead of focusing on supply, they want to restrict pricing. What's the what's the real-world implications when you put in place price controls like that?

Well, New York's a very desirable market, number one. I for the first time got to meet Mondaire recently and I had a very brief conversation with him as just one investor. I think he's made a lot of promises about the outcome for the city and now he actually has to deliver. And so the market's going to do its own assessment day by day in terms of housing because it is it is impossible to maintain rent controls on new builds. You won't get a new build. No one's going to invest in that. And so I think that was I was interested in that question and I'm just waiting for policy. Everybody's waiting for policy there. I wouldn't have voted for him, but I want him to succeed now. So he's the market's a nasty thing because it doesn't care, it's not emotional. And they need a lot of capital, they need a lot of debt, they need a lot of equity, and they need policy. We haven't heard any yet. So I'm kind of saying like everybody else, I'm waiting.

So you're in a little bit of a wait-and-see approach. Let me come over to you, Mr. Moore. In particular, you've done some analysis on more affordable metro areas, more expensive metro areas. What do you see between the what what policy differences do you see that we should be looking at here on this committee?

Well, I mean, it's simply a fact that the cost of living, this is one of the big stories in America, the cost of living is much, much higher in blue states than it is in red states. That's just a fact. And so if you look, for example, at the one of the charts in my testimony, you'll see that the areas where housing is more affordable, the cities are I'll give you the ones with the most affordable housing: San Antonio, Virginia Beach, Memphis, Houston, Birmingham, Jackson, Oklahoma City, Tucson, Atlanta, St. Louis. What do they have in common? Oh yeah, they're all in red states. What are the most expensive places to buy a house? San Francisco, San Jose, Los Angeles, San Diego, New York, Seattle, Boston, Sacramento. I mean, this isn't complicated. All of these regulations and the high taxes, all of those things that are imposed in blue states add to the cost of buying a house and make housing less affordable. It's that simple.

So let's build on that. Let's shift away just from housing. You've explored ESG policies at some of the nation's largest companies. I'm of the view that proxy advisors ISS and Glass Lewis have a disproportionate say on boardrooms trying to drive forward a liberal agenda. We're seeing maybe a shift away from that, but what is the implications of driving forward in a company...

That will make as we move away from ESG, and the good news is we're banks are moving away from those policies, that will reduce costs.

Mr. O'Leary, do you have a view on some of the ESG policies that we've seen companies engage in?

You know, they have to compete in a market that's changing all the time. I these proxy services, for example, there's not enough transparency for me. I don't understand why they make the decisions. I wish we'd force them to be transparent. That would be very helpful because they make some pretty crazy outcome decisions. And I just can't see for the life of me why and so they won't tell me. And I think that's a problem. A lot of CEOs and boards are starting to look at this the same way, wait a second, something's wrong here.

Well, they they have a huge conflict of interest. We have legislation in this committee that I've authored that would address that conflict. There's a whole lot of work we need to do in that regard. Appreciate all of you being here today in your testimony. Mr. Chairman, I'll yield back.

Gentleman's time has expired. The chair now recognizes the gentlelady from Massachusetts, Ms. Pressley, who is recognized for five minutes.

Well, since Black History is American history, I'll say Happy Black History Month. And on the 100th anniversary of Black History Month, I refuse to allow our contributions to be relegated to a footnote or to be whitewashed by an executive order. Dr. Hamilton, I am grateful for your leadership in shaping the national conversation on baby bonds, and I thank you for your partnership and counsel in the drafting of my baby bonds legislation in partnership with Senator Booker. Republicans and Trump won't give you credit, but we know that Trump accounts exist only because of your genius and the work on the ground that you laid as spearheading the issue of baby bonds. So I want to give you your flowers officially on the congressional record. You have been a pioneer in confronting the racial wealth gap. I represent the Massachusetts 7th Congressional District, and a report by the Federal Reserve Bank of Boston found, and this will shock many, but that the median net worth for white households in Boston is $247,500, while for Black households it is a mere $8. That is everything to do with housing. Dr. Hamilton, would you agree that home ownership plays an essential role in wealth building?

Yes. And and thank you, Congresswoman. I honestly am very honored and proud to have that accolade that you offered me.

Thank you. And we're grateful for you. So yes, home ownership is essential to wealth building, and I believe that a majority of the public agrees with and acknowledges that. In fact, during the 1950s and '60s, one of the foundational bricks that built America's middle class was home ownership. It was the advice given by the government to citizens and passed down from parents to to their kids. Home ownership symbolized financial opportunity and freedom. But we know what was also taking place in the '50s and '60s: Jim Crow. Jim Crow discrimination. Black families who sought home ownership were held back by red tape, limited to redlined neighborhoods, and faced blatant racism from banks. And for those who managed to secure a mortgage and buy a home, the value of their homes were grossly diminished by an appraisal system rife with racial bias. And that same appraisal system is around today. Just look at the data. Last year, a report estimated that Boston's Black homeowners lose up to $2.3 billion in wealth because homes owned by Black families are valued about 18 percent less. They can literally be right next door to each other. Than comparable white-owned homes, or roughly $125,000. But this isn't just in my district, it's happening all across the country. I ask unanimous consent to enter into the record a March 2024 article from the Bay State Banner titled, "Boston Black homeowners lose billions to biased property valuations." I also ask to enter into the record a Brookings Institution study titled, "How racial bias in appraisals affects the devaluation of homes in majority-Black neighborhoods." And finally, I ask to enter without unanimous consent a Freddie Mac analysis titled, "Freddie Mac research explores causes for the appraisal valuation gap for homeowners in minority neighborhoods."

Without objection.

Dr. Hamilton, with my remaining time, for Black families of all income levels, there is no getting around a discriminatory appraisal system. Why does this matter for the affordability crisis and the racial wealth gap?

And and you know, we should recognize when we cite that most Americans own their home, that's not true for Black people. And that's grounded in a history that you described. It's not happenstance. Indeed, as we have this conversation, one of the problems is if we look at any analytical issue in an ahistorical way, it's myopic. So if we're if we're revisiting the the Great Recession, and if we're revisiting inflation in the pandemic, if we're not telling the complete story, we are inaccurate. Inflation was to deal with a a pandemic, frankly a a plague that we were faced, and we had supply chain issues. It's almost miraculous that we're still not in a Great Recession today. The critiques of Dodd-Frank Act that we're hearing today, we're losing the context by which it emerged. It's almost as if we will repeat the same problems that we had in the past. Of course we need smart regulation, but complete deregulation was the root of the speculation that nearly brought down our economy in two scenarios.

Thank you, Dr. Hamilton. And on the issue of the appraisal system in particular, I just want to share that I was proud to partner with Senator Warnock to introduce legislation that would modernize the appraisal process to strengthen transparency and accountability and ensure a standard consumer right to appeal if they disagree with the valuation.

Gentlelady's time has expired. Thank you. With that, the chair is going to recognize the gentleman from Pennsylvania, Mr. Meuser, who is the chairman of our oversight and investigation subcommittee and who is celebrating his 39th birthday today. Well, that's what you said, Dan, it was 39. But happy birthday nonetheless.

Thank you, Mr. Chairman. I'm glad you're not under oath, by the way. I'm 40. Well, thank you. Thank you very much to to our witnesses. Very important subject. This committee, I think as you know, and the Trump administration are working on on correcting course to our economy, removing barriers to growth, expanding housing supply through the Housing for the 21st Century Act, strengthening capital formation through the Invest Act, revitalizing community lending through the Main Street Capital Access Act, all bills that have been passed. Taken together, these efforts reflect a broader policy shift away from government-driven market distortion and toward supply-side growth, capital formation, access to capital, housing affordability, pro-growth. What we used to call supply-side, but we don't want to necessarily call it that, but that's what it is. More domestic supply, the more we make in the United States, we exceed demand with supply, inflation comes into check, comes down, and even prices start getting less, and we create competition through the same time. But Mr. O'Leary, good seeing you. From your vantage point as a venture capitalist, in terms of job creation, business formation, long-term economic growth, what what benefits do come from this regulatory and tax supply-side initiatives and approach?

I think what we were discussing regulation before in all 11 sectors, if you gave an individual an entrepreneur... ...and the way I look at it, you know, I go into these classes of students, 240 in the cohort, and I know with certainty, and I tell them this, that in 25 years, two-thirds will work for the other third of the class. That's basically the ratio when students emerge. And so when you ask these individuals, what would you rather have? Reduction in tax or reduction in regulation? It's always reduction in regulation because they assume the taxes, they're competing with everybody else with the same tax rate. So what they want is a path to be able to deploy capital with less friction. And that, by the way, applies to all 11 sectors of the economy. We've been talking a lot about real estate. That's the most recent sector of the S&P 500. That's the 11th sector. But every other sector also has issues around regulation. So you know, something's happened over the last 20 years that somebody decided through multiple administrations that more regulation is better than innovation. I can assure you that is not the case. And it is now time to really take a jackhammer to that stuff and get rid of it and let the economy flourish. And the market believes that is going to happen because you're seeing new highs every day in the Dow. So somebody's optimistic out there. It's not just domestic capital. Money's coming in from all over the world into this index because they believe you're going to do it. You're going to jackhammer regulations.

Thank you. I was just with some folks who do a lot of 7(a) loans to small businesses and they say access to capital continues to be the number one concern of small businesses up to, as you mentioned before, Mr. O'Leary, $50 million and such. So Mr. Brooks, with the decline of community banks, how has it affected mortgage availability, housing development lending, and overall affordability?

Well, Congressman, as I said earlier, one of the biggest issues in mortgage finance is who bears the risk. And over the last 15 years since the financial crisis, it's mostly been the government. So bank formation has been at an all-time low. That has reversed in President Trump's second term, but we have very few new bank starts until the last 12 months. And the banks that do exist, especially the community banks, have more or less been told that mortgages are a risky asset and you should stay away from them. So as a result, community banks tend to be local small business lenders and not very much else. That can change. And we know what a community bank-driven housing finance system looks like because we had it for 80 years between the Great Depression and the financial crisis. It worked pretty well. Now we have a government balance sheet for all of this, which is terrible. My main point here is it's desirable for community banks to drive the housing finance system because community banks are relationship bankers. They know the clients, they know the credits, and they know the collateral better than any Washington, D.C. or Wall Street credit manager will ever know. And so it's in all of our interests that community banks deliver what they used to deliver, which was the majority of housing finance.

Thank you. And certainly one of our axioms here has been to make community banks great again under our chairman, French Hill. Dr. Moore, the affordability relief, inflation moderation, wages rising, mortgage rates easing, to what extent does the housing market depend on sustaining this pro-growth economy?

So just I'll summarize it in the 13 seconds I have left, which is what the chairman said at the outset. The best solution to all these problems, including housing affordability, is economic growth. The stronger economic growth, people's incomes rise, they can afford more, so keep it up. And the most positive feature of your tax bill was the allowing the business to deduct their capital purchase.

Gentleman's time has expired. My time has expired. Thank you, Mr. Chairman, and happy birthday. With that, the gentleman from New York, Mr. Torres, is now recognized for five minutes.

Thank you, Mr. Chair. Dr. Hamilton, your testimony spoke about the importance of public investment, public infrastructure. After World War II, the U.S. saw the emergence of the largest middle class the world had ever seen. Is it fair to say that one of the most important ingredients in the creation of postwar prosperity was public investment?

Absolutely.

Public investment in electrification, in transportation, in mass homeownership, in mass education. And so the lesson of history is that public investment and productivity are not mutually exclusive, but mutually reinforcing.

I think that is the point. The point is that public investment can come in many forms. We can build up public infrastructure and we can invest directly into the American people. So when we start talking about this distinction between supply and investing in people, that's a question of values and how we want to do it. I think there's a risk and we have over-indexed on investing in firms to the point that they're able to turn around and exploit the American people because of an asymmetry of power. When we have people with low endowments, people with unstable jobs, people without a base level of resource by which to compete, not only do we stifle their abilities to produce and engage, but we leave them vulnerable to the whims of those that have power.

For me, it's no accident that the postwar golden age of public investment coincided with the golden age of American productivity growth. During the golden age, American productivity grew by an average of 2.5 to 3 percent a year for 25 years. The economy itself grew by an average of 4 percent a year for 25 years. And if the U.S. had sustained that same level of productivity growth over the last 50 years, the U.S. economy would be twice as large.

And what's more, Congressman, the real wage growth rate was commensurate. So it was an inclusive growth. With that high level of growth, workers benefited as well.

So you can have equity and economic growth, you can have productivity and public investment. No need to create a false choice where none need exist. Mr. Moore, I know you're a great admirer of President Trump. President Trump has repeatedly said, quote, 'I've done more for the Black community than any other president with the possible exception of Abraham Lincoln.' In his mind, Abraham Lincoln is a possible exception. Do you agree with that statement?

I'll say exactly what I said to the previous Congressman, which is what this country needs most to solve so many of our ailments is economic growth. And the numbers over the last...

No, but I asked specifically, do you agree that he's the best president for the Black community since Abraham Lincoln with the possible exception of Abraham Lincoln?

I'm sorry, you said Reagan?

Do you think Donald Trump is the best president for the Black community with the possible exception of Abraham Lincoln? Do you agree with that sentiment? I mean, I think it's delusion of grandeur, but I'm curious about your opinion.

I think the two presidents in my lifetime who have done the most to increase the prosperity of America have been Ronald Reagan and Donald Trump.

Do you think Donald Trump's legacy exceeds that of Abraham Lincoln when it comes to the Black community?

Do I think...

Do you think he's done more for the Black community than Abraham Lincoln?

I think that Trump is not a racist. I think Trump is...

I never said he was a racist. I said, has he done...

I'm saying he pursues policies that are good for everyone. I mean, I think what...

Do you think President... Mr. Moore, I just... I think this is a simple question. Do you think President Trump has done more for the Black community than the president who abolished slavery?

I think Trump's policies are working for Black Americans.

More than Abraham Lincoln. How about Lyndon Johnson? Has he done more for the Black community than President Lyndon Johnson?

I don't know. I'm not going to rank all the presidents and what they've done. I'm saying what he has done so far in this term...

Mr. Hamilton, do you have an opinion on this?

Obviously, the answer is no. But I mean, let me even add one other point about that period that you cited, Congressman. The problem with that period is that it wasn't inclusive. We also know...

Right. African Americans were systematically excluded from higher education and homeownership. And so instead of intergenerational wealth, you have a legacy of intergenerational poverty.

Absolutely, and there are lessons to learn from that. The lesson is, unlike excluding people with an attack on DEIA, what we need is affirmative inclusion. We can ensure that everybody benefits from the largesse of America. We need to design, manage, and implement policies in a way to make sure that your humanity alone makes you eligible and you're not excluded.

I see my time has expired. Thank you.

Gentleman's time has expired. With that, the chair will note that we do have a 1:00 hard stop, so we are trying to get our folks in as quickly as we can. Gentlewoman from California, Mrs. Kim, is recognized for five minutes.

Thank you, Chairman and Ranking Member, for holding this hearing. And I want to thank all of our witnesses for joining us today. You know, last year, I was proud to work with President Trump on getting key provisions in the Working Families Tax Cuts Act that is already signed into law. And I'm so excited a lot of Americans will see the benefits of it as they file tax returns. And thanks to his leadership, Americans are going to be supercharged when they file. So one of my favorite aspects of the bill is Trump accounts that will be seeded with $1,000 for children who are born between January 1 of 2025 and December 31 of 2028. And last week, when Secretary Bessent was before our committee, he shared that already over a million families had signed up for that account. Mr. O'Leary, good to see you again. Can you talk about how you think these Trump accounts will lead to a more financially literate generation of Americans?

Yeah, I think it's a great innovation. I endorsed it at the time it was announced. I think getting the word out is very important as you're doing now. What's unique about this on a bipartisan way, and I spent so much of my career in education, educational software, and most of the policy for that came from New York, Florida, Texas, and California. We were very successful in reading and math and advanced scores there. We failed miserably in financial literacy. And so with this account, by the time the child turns five, as we continue to advance in technology, or six around that age, on whatever device they have, they're going to see their own personal net worth. And if it grows to the index of the market with no further investment than $1,000, they'll get 8 to 12 percent a year is likely. That will trigger an interest at an early age to understand what this is, how it works, and a great opportunity for the parents to explain all aspects of financial literacy, including debt, and how if you have too much debt, you'll lose what's on your phone here. I mean, I wish I had this for my kids. It's a great idea. I can't say enough good stuff about it. I think it's completely bipartisan. And what I like about it for my employees, I can also invest in the employee by investing in their family. So imagine if you're trying to retain a real great engineer, a software engineer, and they just had a kid, and you say to them, look, not only are you getting your bonus this year, but I'm giving to your family by that child. I want to donate to that too. And I think you've already seen J.P. Morgan get behind this. Michael Dell put another $6.2 billion with his wife Susan. It's a great innovation. I can't find anybody who dislikes it on either side. It's a great idea.

So you're right. Especially those of us in California, New York, New Jersey, we're going to do everything we can to amplify the benefits of Trump accounts. And you may know I serve as co-chair of the Financial Literacy and Wealth Creation Caucus. And I know this could be one of the tools that we can utilize. You know, it's so hard to get kids' attention to financial literacy. However, if they know that they already have $1,000 that will continue to grow with the power, or I say the magic of compound interest, I think they're going to be pretty much very, very excited and they're far more likely to invest and use this so they can utilize the funds to create the long-term wealth. And continuing with that, I know, Mr. O'Leary, throughout your career, you have been a long-standing advocate for diversification of investment. So talk about why that investment strategy is so important to avoid financial disaster.

Well, what we've all learned, diversification is the only free lunch in investing. And I learned that from my mother. She had a rule: no more than 20 percent in any one sector and no more than 5 percent in any one stock or bond. And that has really saved my hiney over the years as there's been lots of volatility. But lately, there's new asset classes emerging. And I think it's really interesting. Obviously, crypto is volatile, etc. But I love the idea of financial literacy talking about diversification. And when you index, most of these accounts are just going to be S&P 500. That's 500 stocks across 11 sectors. Now that's diversification. That's why this is a great learning tool. It's a fantastic educational process. I mean, it's amazing when you can find something where nobody dislikes it. That never happens in this town.

I agree with you 100 percent. You're right on that, that when you spread investments across sectors and companies, you're much more resilient to market shifts. That's why I'm so proud that we're working on SEEDS Act that will not only make Trump accounts permanent, but also allow our American working-class families to be able to also invest in crypto assets. So let's talk quickly. In the last five years, cryptocurrency adoption and value have dramatically increased by allowing asset diversification through Trump accounts and will allow American families to continue to benefit from the democratization of finance. I have so many questions to you and conversation I would love to have, but my time is up.

Gentlelady's time has expired. Gentlelady can submit those questions in writing and we will pass those along. With that, the chair now recognizes the gentlelady from Michigan, Ms. Tlaib, for five minutes.

Thank you, Mr. Chair. As a good colleague that I am, Congresswoman Sylvia Garcia had a question and I'm going to ask all of you yes or no since we have a cutoff. But Mr. Brooks, do you believe affordability is a hoax? Yes or no?

Well, it definitely exists. It exists. I've seen it happen.

Okay. Mr. O'Leary?

I didn't hear the question.

Is affordability a hoax? Is it a hoax, affordability? Is it a hoax? Yeah, we know somebody that keeps saying that.

No.

Okay. How about you, Mr. Moore?

Affordability is higher now than any time in the history of the United States.

Dr. Hamilton?

It's not a hoax.

Okay. I also like to bring in my district. Detroit just passed the Rx program. It's an incredible program where it's cash assistance to new mothers in our community. And combating poverty in our country has been really challenging. It's been kind of bizarre to understand, but the more I'm here, I understand that studies by Harvard, for instance, say 65 percent of working-age renter households struggle to pay for basic necessities after paying their rent. It just keeps going up. It's not even going down. I mean, study after study. So Dr. Hamilton, do you see a role in direct assistance in providing financial stability, addressing affordability crisis, and promoting what you call authentic freedom?

Yes, it's power. Those studies that those interventions and the studies that accompany those interventions demonstrate that people were able to do a lot more from the simple intervention of cash.

I sat down with homeless youth and that's what they told us. We understand you want to give us housing and everything, but we also like... we need to get to go to work, we need gas money, all these kinds of things. My Economic Dignity for All agenda encompasses the baby bonus, the child allowance, a monthly payment to adults that build on such research that Harvard was talking about in regards to cash assistance being more impactful. And so you know, zooming out, Dr. Hamilton, you noted that in your outcomes that you see today, including affordability crisis and massive inequality, are result of concentrated economic and political power. And that's what I feel like my colleagues don't have the courage to take on. And so I recently introduced a resolution calling on Congress to end the political economic dominance of wealth of the wealthy few, halt the subsidies and the tax advantages that concentrate economic power and reinvest in the needs of the American people. So Dr. Hamilton, if we are really serious about addressing concentrated economic power, the affordability crisis, how would you think differently about public policy? And what policies like taxing the rich, which is incredibly popular across the board—go ahead and poll all kinds of districts, they will tell you to tax the rich—rebuilding labor movement, breaking up monopolies, and promoting democratic forms of ownership to displace corporate power should we prioritize in thinking about those kinds of policy?

I mean, we obviously need to facilitate the collective ability, the collective right to bargain, the ability for labor to formulate and be able to negotiate the conditions of their workplace. That's a good place to start. Taxing the rich not only offers additional public resources, it curtails some of that political power.

Yeah, it's fairness. I mean, most of the people we want to tax, we're subsidizing their workers' health insurance, food assistance. I mean, it's kind of like this game of you're not going to pay your workers enough, but we're going to... the public is going to give you subsidy... you're going to pay less in taxes, we're going to give you tax breaks and giveaways, and by the way, we'll cover the health insurance and food assistance programs that your workers need to survive.

And if I may, I'll say something and I'll try to be brief. I know this doesn't get said in this room a lot. We need inclusive economic rights. We talk about political rights, civil rights, social rights, cultural rights, but at the end of the day, if you don't have a baseline level of resource, you're not able to engage in a transaction. You're either at the whim of somebody's charitable largesse or the vulnerability of their exploitation.

It's exhausting. It's like survival mode. It's crumbs.

So what we're talking about when we talk about guaranteed income, when we talk about baby bonds, when we talk about Medicare for All, it's simply a baseline level of resource so that people will have the ability to compete and engage.

I mean, my colleagues easily press the button for tax breaks for the wealthy, the corporations, but they don't seem to want to do it for our families. And I mean it. I'm not saying this as some sort of gimmick. I really believe this is the only way we can combat affordability crisis, poverty. And Dr. Hamilton, I would love your opinion on my Public Banking Act. Public banking is something that I think we need to really explore. North Dakota is a great example, but keep writing about it, keep, you know, trying to push again the fact that we need public banking in our country. Have that as part of the market as long as people have a baseline level in which to engage.

Gentlelady's time has expired. Thank you, Doctor. Gentlelady's time has expired. The gentleman from Florida, Mr. Donalds, is recognized for our last five minutes of questioning.

Thank you, Chairman. I think it's important for this hearing that last year, members of Congress on the Republican side of the aisle actually did pass the largest middle-class tax cut in the country's history. No tax on tips is not for billionaires and corporate leaders. Everybody that's on tip sharing in the United States is going to realize that when they file their income taxes. So I think it's important for people to understand that. Mr. O'Leary, real quick. National Association of Home Builders just came out with an article or a report, maybe about a couple of weeks ago. They said that for the cost of a new home today in America, 30 percent of that cost is compliance with the government. In your... in the facilities that you're building, what is the percentage of the construction budget that is tied up in compliance costs?

Varies state by state. I think that 30 percent number would not be correct for California. I believe it to be 45 percent there. So if you want to reduce costs in California, you got to get a big axe out and start chopping the red tape. I do a lot of commercial real estate and what I've learned is there are states, let me give you an example, Utah, that has a program called MIDA, M-I-D-A. Other states should copy that because it's an accelerated permit. If you're bringing a project of state importance, so that it guarantees certainty for capital. So you know, large projects that cost billions of dollars require some form of certainty path to permit. I really applaud the leadership of Utah with that program. I learned about it recently. It is something I've not seen anywhere else, so they've got something going there. And other states should copy that. The permitting is generally in commercial real estate less, but it's more about the time. The hidden cost is the cost of capital. The longer it takes us to get a permit, the more that capital costs. And so states like New York and New Jersey right now with the rent control threats, they got issues. And it's a real big problem. And I'm just, you know, agnostic because I have to find states that want the money and where you can build in. So three cheers for Utah. I'm a newbie, but I'm loving that place. Salt Lake City, here I come.

Well, it's interesting you say that because I know there was the conversation around is affordability a hoax. And look, here's the true answer. What President Trump is talking about is that Democrats caring about affordability is a hoax because it's their economic policies, it's their public policies here on Capitol Hill that have driven the fact that compliance costs for new housing construction is exorbitantly higher than it used to be. If a single-family home in the United States costs $300,000 and a third of the cost is government compliance and permitting, well then that means that the government, whether it's federal, state, or local, is driving up the cost on home acquisition for the American people artificially. And to your point, Mr. O'Leary, we have to decide if we're going to be efficient with the people's time and efficient with their resources because contractors are not eating the costs to develop property. Developers are not eating the cost to develop property because they will go out of business. The truth is, if we're going to be smart about this, we examine all of the regulatory burdens, federal, state, and local, around constructing new housing, constructing commercial development. And to the point I think you made earlier, it doesn't mean you're going to have a Wild West of no permitting, but there does have to be certainty in the environment because time is money and that does not change regardless of your politics. Dr. Hamilton, I know we were talking about... you were having a conversation about public infrastructure earlier. Do you believe the United States is spending less on public infrastructure today than it did in the 1970s?

The question is how we spend on public infrastructure. When we offer $4 trillion...

Dr. Hamilton, I don't want to cut you off. Is the United States spending less on public infrastructure today than we were in the 1970s?

The answer is nuanced. I can explain it, but it's nuanced.

Dollars... I didn't realize dollars were nuanced. So you're either spending them or you're not. Are we spending more or less?

We can get to the nuance in a second.

The nuance is important. Are we spending more or less than we were in the '70s or the '80s or the '90s?

Inclusive of that $4 trillion tax cut for the wealthy, the answer is yes. We are spending more on public infrastructure. The question is for whom and to whom.

So we're spending more. Yes or no? Yes. Okay. So now that that's been established, how are you going to then make the argument that we're not actually investing in things like public schools or roads or healthcare infrastructure, etc., if the United States is spending more today than we were in the past?

I just did. I said it's for whom and to whom. So if we're spending $4 trillion directed by a tax cut to the wealthy...

But tax policy has nothing to do with spending policy, sir. Those are two different things. Yeah, so there...

Gentleman's time has expired. Gentleman's time has expired. We have hit our a little past our hard stop. I want to say thank you to all of our witnesses today. This was appreciated and insightful. I would like to also remind all of our members that without objection, they will have five legislative days to submit additional written questions for the witnesses to the chair. The questions will be then forwarded to the witnesses for their response. And witnesses, we ask that you respond no later than March 17 of 2026. And with that, thanks again. Happy birthday, Mr. Meuser. And we are adjourned. Thank you.