Illinois Chamber of Commerce Policy Luncheon
REMARKS PREPARED FOR
STEVE PRESTON, SECRETARY OF HOUSING AND URBAN DEVELOPMENT
TUESDAY, DECEMBER 16, 2008
Thank you, Pat.
It is so good to be home. My family and I left here almost three years ago to serve in Washington. It has been a remarkable honor. But we are looking forward to coming home.
I started my career just a few blocks from here at First National Bank of Chicago, after going to college at Northwestern and while earning an MBA at Chicago. Later, I spent ten years at ServiceMaster in Downers Grove and welcomed three of our children into the world at Good Samaritan Hospital.
For me, there is nothing like seeing Lake Michigan on the way in. This is a great place to work and raise a family, and a wonderful place to live.
But I'm not the only one looking to Illinois. The world's attention has been focused here...specifically on Chicago...for the past few weeks as we transition to a new administration.
The foundation for our nation's future is being constructed here, both with personnel decisions and decisions about upcoming policy.
Across the globe, people are looking to Chicago because they are watching democracy in action, the peaceful and legitimate transition of power. And they find that inspiring, enviable, and meaningful.
In the last week, however, attention has been drawn again to Illinois...here in Chicago and in Springfield...for another reason. The accounts of recent behavior have produced outrage in all of us. We are sickened by what we have read. If the charges are true, the actions are breathtaking, in their selfishness and abandonment of the public trust.
Many people are shocked less at the charges of corruption, and more by the brazenness of his words. Because somehow-as the thinking goes-we all know that this kind of thing goes on and that's the dirty business of politics. People begin to accept it as just the way things are.
But in this case, it appears to be so blatant, and the words so disturbing, we cannot call it anything other than what it is.
But I believe that in this moment, we must take a step back and realize that even if we pull the harsh profanity and cold arrogance out of the equation, it is still reprehensible. Whatever form corruption takes, whether it is steering government contracts, illegal campaign contributions, other forms of personal enrichment, it should have no place among our leaders. It is criminal.
And if we accept it, it diminishes all of us.
Our outrage needs to be visceral and powerful and motivating to the point where we insist that our leaders take action in doing the long hard work of ensuring that ethics reform is effective and comprehensive.
I am particularly troubled, because it stands in such sharp contrast to this state's greatness-and because of it, we are limited in our ability to build upon that greatness. There is not another state in the nation with more going for it than Illinois. And when our leadership doesn't reflect that, we miss the opportunity to take full advantage of our promise.
At our core, we are good midwestern people; people who are welcoming, who work together, and who care about each other.
Chicago is a cosmopolitan city in a state that is a global economic powerhouse--more than $49 billion in export trade to other countries in 2007. It is a state that has a diverse commercial foundation: agriculture, finance, manufacturing, technology, biomedical research, defense facilities, and a great transportation hub.
It is home to some of America's most beloved institutions: the Cubs, the White Sox, the Bears, and the Bulls...and the Chicago Symphony Orchestra, and Buddy Guy's Legends.
We have some of the best educational institutions in the world developing talent in our state.
Hopefully, we will soon be able to add "Olympic City" to that list.
This is also a state of opportunity and mobility. I know because it is the education, professional opportunities, and mentoring I received in this state that took me from a family where neither parent graduated from high school to the Presidents cabinet.
I know people have become cynical about our government and its leaders-it is no surprise.
And while I believe in limited government, I believe that good government can and does change peoples' lives. That is why we need leaders who understand the significance of the charge entrusted to them. I have seen it first hand and I have been blessed to be a part of it.
I can remember the faces and stories of people I sat with in the Gulf Coast who had lost everything and were able to rebuild their lives because of our work. I see it today at HUD, as we are helping hundreds of thousands of people keep their homes through refinancing and counseling.
And we have seen it right here in Chicago with much of the work that HUD and the city have done in rebuilding public housing from concentrations of poverty and crime to mixed income, well designed neighborhoods where children and families can live safely in a positive community. We all remember what Cabrini Green and Robert Taylor homes were like and how their redevelopment has changed the face of the city. In September, I was with the Mayor at Park Boulevard, which is the old Stateway Gardens. We awarded the city a grant to support the continuing expansion of that development. We had a long conversation about how far the neighborhood had come. He said, that he felt that the redeveloped communities gave people their souls back.
The stakes are high and we need leaders who are up to the task. We are in the midst of what will be a very challenging period in our country, and the path forward is not clear. It is a time when the issues are complex, the policy debates are far-reaching and emotional, and the effects of the decisions our leaders make will have tangible and lasting impact on the lives of Americans.
It is a time for vision and committed leadership.
On the national level, much of the focus in the coming weeks will be about stimulus packages and bailouts. We will also need to keep our eyes sharply focused on issues that will support the long-term underpinnings of a healthy economy-an economy that will keep America competitive.
Issues like trade policies, which is one of our most important avenues for growth. We need our companies to be able to sell to the 95 percent of the world outside our borders on a free and fair basis. If they cannot, foreign competitors will fill the gap.
Like healthcare policies that tap into private-market forces to improve quality, choice, accessibility and transparency, while driving down cost. Today, we spend more per person in health care than any country in the world.
Like tax policies that allow our small businesses to reinvest their profits into innovation and job creation, rather than sending more dollars back to Washington. Small businesses create two-thirds of the new jobs in our country. We need that entrepreneurial energy to continue.
Like education policies that ensure children are building the skills they need to compete and support themselves in life.
And we need policies to help people keep their homes at a time when so many of them are losing them.
I arrived at HUD in June-about six months ago. The nation was facing an expanding crisis. Foreclosures were on the rise, as more and more subprime adjustable rate mortgages reset to unaffordable levels. Home prices were falling below their loan values, so many borrowers were unable to refinance or sell their homes. Inventory was rapidly increasing.
Soon thereafter, financial institutions were unable to secure liquidity so desperately needed to oil the wheels of our economy. Credit was drying up. And as our economy slowed down, the ripple effects were global. There was a loss of confidence in the markets and a hesitant fear felt by investors.
Strong leadership was necessary. So, our nation responded with unprecedented intervention by the federal government.
The Treasury is infusing over $300 billion into the equity base of financial institutions to stabilize the sector.
The FDIC has provided sweeping guarantees for bank deposits and obligations.
And the Fed is injecting trillions of dollars in liquidity into the marketplace by purchasing various forms of debt.
Mortgage credit has remained available to American families almost entirely due to government support. Today, the U.S. government supports about 90 percent of new mortgages through Fannie Mae and Freddie Mac and federal insurance programs like HUD's Federal Housing Administration (FHA).
HUD's FHA operation insures mortgages made by private lenders. A couple of years ago, FHA represented about two percent of new mortgages in the country. Today, we are insuring about 20 percent of the new mortgages in the country. Our mission to homeowners has never been more essential.
Within the last year, FHA has helped more than 465,000 families refinance into fixed-rate, 30-year, FHA-insured mortgages. Many of these people had been trapped in the strangle hold of a mortgage which had reset or was about to reset. Over the past year, FHA has provided over $200 billion in loan guarantees. This is more than three times for the same period last year.
FHA loans limits have increased significantly so that families in high cost areas, like Chicago, can receive our assistance. We are expanding our ability to assist homeowners who have gone seriously delinquent. And we are dramatically increasing housing counseling for people in trouble.
In addition, private industry has come together to accelerate the process for lowering the cost of loans that have become unaffordable. Their efforts have helped many people stay in their homes. Still we continue to receive constant feedback that people are falling through the cracks.
Homeowners complain that mortgage servicers are difficult to reach or unwilling to help. Investors and servicers are still at odds over how much assistance servicers can provide. I fear that if we don't see more results from private industry, Congress or states attorneys general will intervene aggressively.
There are also a number of recommendations for further government intervention to reduce foreclosures. As we consider them, we need to ask ourselves the tough questions:
Who are they intended to help?
Will they be effective?
What is the cost?
And what will be the unintended consequences?
Clearly, in these difficult times, we continue to need strong leadership.
I believe that most leaders in public service care deeply about what they do and are committed to their ideals. And in serving, many of them subject themselves to tremendous scrutiny. Teddy Roosevelt's speech titled "The Man in the Arena" has received much focus recently for good reason. Roosevelt spoke of the challenge of public service, that we are called upon to give our best judgment and to perform our best service, without knowing the outcome, sometimes achieving our aims, and sometimes falling short of the mark. He said:
The credit belongs to the man who is actually in the arena...who does actually strive to do the deeds; who knows great enthusiasms, the great devotions; who spends himself in a worthy cause...
I agree with that view. I admire the men and women in the arena...people who want to serve and want to make a difference with their lives. But people who desecrate the arena have no place in it.
While speaking in Peoria nearly 150 years ago, Abraham Lincoln said,
Stand with anybody that stands right. Stand with him while he is right and part with him when he goes wrong.