Cannabis Stocks News
Interactive Brokers Advertisement
Home > Boards > US OTC > Banking and Finance > Fannie Mae (FNMA)

GSE Compromise No Closer Despite Panel Vote

Public Reply | Private Reply | Keep | Last ReadPost New MsgReplies (4) | Next 10 | Previous | Next
obiterdictum Member Profile
Followed By 257
Posts 4,020
Boards Moderated 0
Alias Born 10/12/08
160x600 placeholder
Morgan Stanley Treasurer Celeste Mellet Brown to Leave for Fannie Mae, Sources Say--Update "Dow Jones News" - 4/20/2017 2:34:00 PM
Morgan Stanley Treasurer Celeste Mellet Brown to Leave for Fannie Mae, Sources Say "Dow Jones News" - 4/20/2017 2:10:00 PM
Stocks with Key Influences on the Horizon and New Coverage in the Mobile Tech Space "InvestorsHub NewsWire" - 4/20/2017 9:00:00 AM
Traders News Issues Updates and a New Hot Cyber Security Feature Profile "InvestorsHub NewsWire" - 12/13/2016 9:30:00 AM
Traders News Source is Providing an Actionable Report on the following Securities "InvestorsHub NewsWire" - 11/14/2016 7:00:00 AM
Trump's Transition Team Works to Form Cabinet "Dow Jones News" - 11/11/2016 7:40:00 AM
Trump Team Considering Rep. Jeb Hensarling as Treasury Secretary "Dow Jones News" - 11/10/2016 5:10:00 PM
Finance Watch -- WSJ "Dow Jones News" - 11/4/2016 3:02:00 AM
Fannie Mae to Send $3 Billion Dividend to Treasury "Dow Jones News" - 11/3/2016 9:10:00 AM
Freddie Mac to Send $2.3 Billion Dividend to Treasury "Dow Jones News" - 11/1/2016 10:10:00 AM
Appeals Court to Decide on Document Release in Fannie Mae Dispute "Dow Jones News" - 10/27/2016 7:30:00 PM
Genworth, China Oceanwide Chart Path to Regulatory Approval of Deal "Dow Jones News" - 10/25/2016 1:00:00 AM
Richard Perry to Shutter Hedge Fund "Dow Jones News" - 9/26/2016 7:10:00 PM
Freddie Mac Starts Pilot Program With Looser Standards "Dow Jones News" - 9/20/2016 1:40:00 AM
KinerjaPay Corp. (OTC QB: KPAY) Announces Partnership with 62hall – Forecasts 66% Growth by Q2 2017 "InvestorsHub NewsWire" - 9/16/2016 7:00:00 AM
Traders News Analyzes Three New Securities This Week "InvestorsHub NewsWire" - 9/15/2016 7:45:00 AM
obiterdictum   Tuesday, 07/23/13 08:22:19 PM
Re: None
Post # of 425404 
GSE Compromise No Closer Despite Panel Vote

By Victoria Finkle, Joe Adler
24 July 2013
American Banker
(c) 2013 American Banker and SourceMedia, Inc. All rights reserved.

WASHINGTON — The gulf between two competing plans to reform the nation's housing finance system appeared ever wider Tuesday even though House Republicans were poised to advance their bill to a full floor vote.

The House Financial Services Committee met to vote on legislation backed by Chairman Jeb Hensarling, R-Texas, and other GOP leaders to accelerate the wind-down of Fannie Mae and Freddie Mac and replace the two government-sponsored enterprises with a system devoid of any new government guarantees. But the vote was scheduled the same day as a Senate Banking Committee hearing where members continued to tout a more bipartisan plan — co-sponsored by Sens. Mark Warner, D-Va., and Bob Corker, R-Tenn. — that would preserve a government backstop.

While the Republican-backed bill, titled the Protecting American Taxpayers and Homebuyers Act, appeared headed for committee approval, the committee markup featured continued Democratic claims that the legislation would destabilize the housing finance system, render the 30-year mortgage unaffordable for many potential homebuyers and fail to get adequate support from the Senate.

"I would just urge the chairman to pull this bill and work with us to advance a bill that stands a chance of becoming law — because this bill will never receive a Democratic vote in the House or the Senate," said Rep. Stephen Lynch, D-Mass. "And we're wasting an opportunity — we're squandering an opportunity here to do something important."

But Hensarling and other Republicans were steadfast, arguing that House Democrats were in essence defending the current system dominated by Fannie and Freddie by not offering alternative solutions.

"[I]f you plan to offer no alternative, then you are left protecting the status quo — the status quo … [that] … can make home ownership twice as difficult and twice as expensive," Hensarling told Rep. Maxine Waters, D-Calif., the top Democrat on the panel. "If you choose to offer a substitute, and I hope that you do, then certainly I look forward to putting it under the same scrutiny that your side will put on the PATH Act."

Democrats fired back, denying allegations that they are supportive of the current system. They urged the committee's GOP leadership to follow Corker and Warner's lead and try to develop a bipartisan proposal, rather than continue to back a plan that Democrats say is too focused on relying on the private sector without a realistic approach for transitioning away from Fannie and Freddie.

"Instead of working across the aisle like Mr. Corker and Mr. Warner and others in the Senate, where they have a bipartisan approach to the same challenge, my Republican colleagues have decided to pursue an ideologically extreme and dangerous bill," Lynch said.

The key difference between the two bills is whether a new housing finance system includes a government backstop to support whatever new private market is established for mortgages. Under the House GOP's plan, a five-year wind-down of Fannie and Freddie would be followed by the creation of a new "utility" that, while authorized to develop "best practices" for private mortgage participants, would be barred from providing any direct support for the housing market.

By contrast, Corker and Warner's bill, while aiming to reinvigorate the private market, would preserve a government backstop in the form of a new agency, known as the Federal Mortgage Insurance Corp., established to cover the losses of private mortgage insurers in a crisis.

"Most people on" the Senate committee "have come to the conclusion that some type of backstop is a reasonable place to be," Corker said at the Senate hearing later in the day.

The House committee debated a series of amendments to the PATH Act, including a proposal by Waters — strongly opposed by Republicans — to include a government guarantee similar to that proposed in the Corker-Warner plan. (The committee was expected to pass the overall bill as early as late Tuesday, potentially moving it to the floor for a full House vote in coming weeks.)

"This amendment is actually worse than existing law," said Rep. Patrick McHenry, R-N.C., who raised concerns that it could lead to the same type of taxpayer bailouts at the heart of the conservatorships of Fannie and Freddie.

Rep. Lynn Westmoreland, R-Ga., agreed, saying, "This amendment basically guts the intent of what we're trying to do in reform."

Another amendment proposed by Democrats would require the Federal Housing Finance Agency to determine if there was sufficient private market funding in the new system for multifamily housing projects before the GSEs were wound down. A third amendment would require the FHFA director and Treasury Secretary to ensure that 30-year mortgages are still available to low and medium-income borrowers ahead of the elimination of the GSEs. (All three Democratic amendments, along with several others addressing the issuance of covered bonds and the Federal Housing Administration, were expected to fail.)

At the Senate hearing, which was specifically called to focus on ensuring access for community-based institutions to the housing finance system, Corker and Warner along with others continued to argue that some type of government role is still needed to ensure a smooth transition.

Both Corker and Warner attempted to get agreement from Sandra Thompson, an FHFA deputy director who testified at the hearing, that a mortgage system lacking some backstop would make it hard for smaller institutions to compete with the biggest banks.

"Wouldn't the larger institutions more and more dominate the market if there weren't some type of government backstop?" Corker said.

Although Thompson declined to express support for either approach being discussed by lawmakers, she did suggest that community-based institutions could face higher costs in a system lacking government support.

"Can you envision a system where they would be on an equal footing with Wells Fargo and JPMorgan?" Warner said.

Thompson responded that that was "difficult to imagine" since "I've never worked in an environment where there wasn't that" support. Still, she was careful about expressing preference either way.

"I am envisioning the Congress working to enact legislation that I am happy to implement," she said.

Public Reply | Private Reply | Keep | Last ReadPost New MsgReplies (4) | Next 10 | Previous | Next
Follow Board Follow Board Keyboard Shortcuts Report TOS Violation
Current Price
Detailed Quote - Discussion Board
Intraday Chart
+/- to Watchlist