March 21, 2014

AEI slams Johnson-Crapo GSE reform

March 24, 2014 – American Enterprise Institute, a right-leaning think tank, has slammed the proposed housing finance reform bill from Sens. Tim Johnson, D-S.D., and Mike Crapo, R-Idaho, as "the ObamaCare of GSE reform."

AEI visiting fellow James Glassman made the charge in a piece jointly published by The Weekly Standard.

"In going through contortions to reinvent the housing finance system, the senators have avoided the obvious solution: keep the basic platform that has generally served American homeowners well but reform it to reduce risks," Glassman wrote. "Instead, Johnson and the others have come up with a contraption that resembles the Affordable Care Act in its convolutions and its potential for unintended consequences."

NAFCU Senior Vice President of Government Affairs and General Counsel Carrie Hunt attended a White House meeting with Housing and Urban Development Secretary Sean Donovan and other financial industry groups on the Johnson-Crapo bill last Thursday.

The GSE reform package was released in full last week. It would provide for a wind-down of Fannie Mae and Freddie Mac and creation of a new mortgage insurance entity that would be authorized to create one or more mutual companies to facilitate lenders' access to the secondary mortgage market, including small lenders such as credit unions. The plan also sets up a series of new fees and plan for transferring Fannie and Freddie funds to help capitalize the new entity.

NAFCU continues to review the 442-page bill and summary information. The association is urging lawmakers to ensure credit unions government-guaranteed access to the secondary mortgage market and fair pricing that is based on loan quality, not quantity, in any housing finance reform package.