April 24, 2013

GSE hearing highlights uncertainties in reform

April 25, 2013 – Lawmakers in Wednesday's House Financial Services Committee hearing on housing finance aired ongoing concerns about how to deal with the wind-down of Fannie Mae and Freddie Mac and what the government's future role in housing finance should be.

Panel Chairman Jeb Hensarling, R-Texas, continued to criticize the administration's handling of the housing finance situation, declaring that the president's 2014 budget offers the equivalent of a "bailout" for the Federal Housing Administration. Ranking Member Maxine Waters, D-Calif., said Fannie Mae's and Freddie Mac's share of the mortgage market is declining and aired concerns about eliminating the government's role in future reform of the housing finance system.

Rep. Randy Neugebauer, R-Texas, said the market still faces a lot of regulatory risk, particularly in light of the pending nature of several mortgage lending rules under the Dodd-Frank Act.

In one exchange, Rep. Steve Stivers, R-Ohio, suggested that community banks were relying a good deal on the Federal Home Loan Banks for liquidity. Witness James Millstein, chairman and CEO of Millstein & Co., noted that Fannie Mae and Freddie Mac are still a critical funding source in the secondary market. Regarding the two GSEs, Rep. David Scott, D-Ga., said incremental measures, such as increases in guarantee fees, should be explored as an alternative to winding down the entities.

NAFCU Executive Vice President of Government Affairs Dan Berger, in a letter sent in advance of Wednesday's hearing, emphasized the need to ensure fair pricing that emphasizes loan quality over quantity; and unfettered credit union access to the secondary market.