REP. TOM PRICE: Well, how — how do you get to the bottom of this housing problem and challenge that we have? You get to the bottom when the market determines that housing prices have fallen to an appropriate amount. And, hopefully, we still believe that markets ought to be how we determine what housing prices ought to be, and not that the government ought to be determining that.

When we get to that bottom, then housing prices will — the demand will increase and housing prices will begin to come up. You can’t artificially change that by congressional action, by governmental action.

When you try to do that, all you do is manipulate the market and, I believe, prolong the challenges and the pain that — that we’re feeling. And, just as a point on that $300 billion, it’s extremely important. The chairman is very accurate in what he says all the time. And he’s very accurate in what he puts in bills. And the $300 billion is in there for a reason.

It’s because that’s the ultimate exposure if in fact the worst thing would happen — were to happen. And that’s important to appreciate.

REP. BARNEY FRANK: That’s the silliest thing people will hear today, even if they watch the Cartoon Network. That would be if every mortgage totally failed, and you recovered nothing from it.

By the way, I probably shouldn’t have been here, because Mr. Price could have debated himself, because when he says have the government stay out of the market, that contradicts his bragging about FHA Secure and the HOPE NOW, which were also government interventions in the market.

MARGARET WARNER: Congressman…

REP. BARNEY FRANK: So, there’s just a total contradiction here about what you do or don’t do.

MARGARET WARNER: OK.

But, Congressman Frank, let me get you to respond to Congressman Price’s point that, essentially, by doing this, you’re creating a — basically a false floor under house prices and that the only way to get out of this is just let them fall where they’re going to fall and then come back.

REP. BARNEY FRANK: Well, the answer, first of all, is, if he really believed that, he wouldn’t be bragging about FHA Secure and the other federal program. So, there’s a kind of contradiction there.

Secondly, no, this is not stopping prices from going. As a matter of fact, this begins with the holders of the mortgages being told, you better reduce the amount you think you’re going to get.

And we are only going to give a guarantee if they get down to 85 percent of the appraised value. The government isn’t appraising. The government is going to rely on private appraisers. No, we assume prices are going to be going down. And there’s nothing in here that’s going to stop prices from going down.

Again, the lender is being told, you’re not going to get what that mortgage says. And, by the way, that’s 85 percent of the value of the house. It will be less than 85 percent of the value of these loans, because the loans are above the value of the house. So, we’re telling the lender, you’re going to have to take a very substantial reduction in what you thought you could get if you want to participate in this.

And, so, there’s no — no one is stopping the market from ultimately adjusting prices.