May 23, 2014

GSE reform future unclear

May 27, 2014 – After the Senate Banking Committee reported out a revised housing finance reform bill by a close vote, the future of reform in the short term remains unclear.

It is unlikely the bill, from committee Chairman Tim Johnson, D-S.D., and Ranking Member Mike Crapo, R-Idaho, will reach the Senate floor.

NAFCU has been in frequent contact with Senate Banking members, other members of the House and Senate, the White House, Federal Housing Finance Agency and more to ensure that small institutions have equal, competitive access to the secondary mortgage market in any future housing finance system. It has meanwhile raised concerns about costs and uncertainty surrounding the proposed reforms. It has made several recommendations with other financial trade organizations to improve the discussion draft.

Sen. Sherrod Brown, D-Ohio, who opposed the bill with Sen. Elizabeth Warren, D-Mass., and others on the committee, was quoted in reports saying that he and the others had not yet begun on any formal legislation as an alternative. However, he said that the lawmakers have been in discussion over "how to fix" government-sponsored agencies Fannie Mae and Freddie Mac, to avoid a repeat of the capital problems the entities had during the financial crisis.

Observers believe that the bipartisan Johnson-Crapo bill had the most chance of success of any recent attempts, and that a Democratic bill would not fare well.