NEWSCrisis 'specter' could push mortgage reform: BPC's Bond
By Ruth Mantell
Nov 7, 2013 14:29:16 (ET)
WASHINGTON (MarketWatch) -- Even as memories of the housing crisis fade, and two mortgage-finance giants are close to making taxpayers whole on almost $200 billion in bailouts, lawmakers must still reform the U.S. housing-finance system, Kit Bond, co-chair of the Bipartisan Policy Center's housing commission, told MarketWatch in an interview.
Mortgage buyers Fannie Mae and Freddie Mac have been in federal conservatorship for five years, and some politicians are pushing to wind them down, and increase the private market's role in the market. But as the housing market recovers, and Fannie and Freddie send hefty payments to the Treasury Department, some question whether there's still a will in Washington to act.
Yet this is not the time to abandon housing-finance reform, said Bond, a former Republican senator from Missouri.
Some of the ideas promoted by the BPC, a think tank founded by several Washington heavy hitters in 2007, are contained in a bipartisan Senate bill on housing reform.
Here's an edited transcript of Bond's conversation with MarketWatch.
How have profits at Fannie Mae and Freddie Mac , and the rebounding housing market, affected the urgency in Congress to move forward with reform?
I would hope that the urgency is still there. We have slowed down some bleeding from the deep wounds imposed on taxpayers. But we still know that the existing model [of government-sponsored enterprises Fannie Mae and Freddie Mac] does not work.
Progress on bipartisan legislation to wind down Fannie and Freddie and reform the U.S. housing-finance system has been sidelined by the heated spending debates. What are the chances that housing-finance reform will pass this Congress?
There's no question that put a damper on everything. There are a lot of things that need to be done in Congress.
The housing system was at the core of the problems in the financial meltdown, and I would hope that people would keep in mind how bad it was in '09, '10, when all of the trash that aggressive brokers pushed on people who couldn't afford houses collapsed.
The specter of the housing crisis and the tremendous need for reforming the federal housing system could push people on both sides to say: 'Hey, maybe it's time we work together.'
There's speculation that Sandra Thompson, a deputy director at the Federal Housing Finance Agency, could be the administration's next pick to lead Fannie and Freddie's regulator. But Republicans have already blocked two of the president's choices to lead the FHFA, and support for Acting Director Edward DeMarco because he has rejected allowing principal reductions for GSE-backed loans. If the president taps Thompson, what are her chances at confirmation?
I don't know. I'm not deeply involved in the Republican debate. I would expect that if somebody else is nominated, they would consider that person very carefully. We've got to have somebody in there. DeMarco has done a good job, and I hope somebody could be found to replace him who will continue to do a good job.
Rep. Jeb Hensarling, a Republican of Texas and chair of the House's Committee on Financial Services, wants a smaller role for government in the country's housing-finance system than envisioned by a bipartisan Senate bill. What are the chances that Republicans in the House will agree to legislation that includes a larger role for the government?
It's an uphill stump to jump...The great thing about [a BPC housing-finance-reform plan] is that we believe it is a blueprint that can bridge a divide between Republicans and Democrats.
AI
